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2015 (10) TMI 1499 - AT - Income TaxClaim of deduction under section 80IB(10) - CIT(A) allowed the claim - Held that - CIT(A) after analyzing the development agreement, and thereafter following the decision of the Ahmedabad Bench of the Tribunal in the case of Shakti Corporation (2008 (11) TMI 436 - ITAT AHMEDABAD) and Radhe Developers (2007 (6) TMI 316 - ITAT AHMEDABAD ) has allowed the claim of deduction under section 80IB(10) to the assessee. We find that the CIT(A) has given a finding that the entire risk for development of the project was taken by the assessee and the assessee was not paid remuneration as contractor. The assessee purchased the land for fixed consideration and developed the housing project on its own cost, and there was no joint venture with the land owner. This finding of the CIT(A) has not been controverted by the DR by bringing any positive material on record. Further, no material was also brought on record to show why the decision of the Tribunal in the case of Shakti Corporation (supra) and the Radhe Developers (supra) should not have been followed by the CIT(A). In the absence of the same, we find no good reason to interfere with the order of the CIT(A), which is confirmed and the ground of the appeal of the Revenue is dismissed. - Decided in favour of assessee.
Issues:
- Appeal against CIT(A)'s order directing AO to allow deduction under section 80IB(10) of the Act. Analysis: 1. Issue of Deduction under Section 80IB(10): - The Revenue appealed against the CIT(A)'s order directing the AO to allow the assessee's claim for deduction of Rs. 3,38,66,040 under section 80IB(10) of the Act. - The AO disallowed the deduction initially, stating that the land was not in the name of the firm and that the appellant was acting as an agent for land consideration collection and a contractor for construction. - However, the CIT(A) allowed the deduction after considering the appellant's arguments and evidence. The CIT(A) found that the appellant had dominant control over the land, bore the risks associated with the housing project, and had not earned fixed remuneration as a contractor. - The CIT(A) referred to previous decisions and highlighted that the appellant had purchased the land for a fixed consideration, developed the project at its own cost, and did not have a joint venture with the landowner. - The Tribunal confirmed the CIT(A)'s decision, noting that the entire risk was borne by the appellant, and there was no material to challenge the CIT(A)'s findings or the previous Tribunal decisions cited. 2. Judicial Precedents and Interpretation of Development Agreements: - The CIT(A) referred to judicial precedents, including decisions related to development agreements and joint ventures in the real estate sector. - The CIT(A) emphasized that the appellant's agreement with the society for land development was not a joint venture but a contract for services, as the appellant had control over the project and bore the risks. - The Tribunal upheld the CIT(A)'s reliance on legal interpretations regarding development agreements and joint ventures, supporting the allowance of deduction under section 80IB(10) to the appellant. 3. Ex Parte Disposal of Appeal: - The appeal was disposed of ex parte as neither the appellant nor any representative appeared during the proceedings. - Despite the absence of the appellant, the Tribunal considered the arguments of the DR and the material on record to uphold the CIT(A)'s decision to allow the deduction under section 80IB(10). 4. Final Decision: - The Tribunal dismissed the appeal of the Revenue, confirming the CIT(A)'s order to allow the deduction under section 80IB(10) to the appellant. - The decision was based on the appellant's dominant control over the project, assumption of risks, absence of fixed remuneration as a contractor, and lack of joint venture with the landowner. In conclusion, the Tribunal upheld the CIT(A)'s decision to allow the deduction under section 80IB(10) to the appellant, emphasizing the appellant's control over the project and the absence of a joint venture arrangement with the landowner. The legal interpretations and precedents cited supported the decision, leading to the dismissal of the Revenue's appeal.
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