2016 (2) TMI 464 - AT - Income Tax

Disallowance of claim of the assessee made u/s.80-IB(10) - Held that - It is seen that the entire risk is of the appellant who is developing the project and there is no agreement for fixed remuneration as a contractor. In the instant case, the appellant has purchased the land for fixed consideration and has developed the housing project on its own cost and there is no joint venture with the land owner and thus in terms of decision in the case of M/s. Shakti Corporation 2008 (11) TMI 436 - ITAT AHMEDABAD and the ratio of Radhe Developers 2007 (6) TMI 316 - ITAT AHMEDABAD the AO is directed to allow deduction u/s.80IB(10) to the appellant. - Decided in favour of assessee

Summary

Issues:
1. Allowance of deduction u/s.80-IB(10) of the Act
2. Interpretation of conditions for claiming deduction u/s.80IB(10)
3. Compliance with prescribed time for project completion

Issue 1: Allowance of deduction u/s.80-IB(10) of the Act

The appeal by the Revenue challenged the order of the Ld. Commissioner of Income Tax(Appeals)-I, Ahmedabad, regarding the allowance of the assessee's claim for deduction of a specific amount under section 80-IB(10) of the Income Tax Act for the Assessment Year 2008-09. The Assessing Officer disallowed the claim initially, which led to the appeal. The Ld.CIT(A) partly allowed the appeal, directing the AO to allow the deduction based on precedents set by the Coordinate Bench. The Revenue contended that the assessee was not entitled to the deduction, while the assessee's counsel supported the Ld.CIT(A)'s decision, citing relevant case laws. The Tribunal upheld the Ld.CIT(A)'s order, emphasizing that the assessee had dominant control over the project and bore the associated risks, making them eligible for the deduction.

Issue 2: Interpretation of conditions for claiming deduction u/s.80IB(10)

The Revenue argued that the land being in the name of a separate legal entity, the Society, should disqualify the assessee from claiming the deduction under section 80IB(10) as the assessee was a contractor, not a developer. However, the Tribunal noted that the development agreement between the Society and the assessee established the assessee's dominant control over the project, including bearing the risks and costs, which aligned with the conditions for claiming the deduction. The Tribunal relied on previous decisions and the specific terms of the agreement to support the allowance of the deduction.

Issue 3: Compliance with prescribed time for project completion

The Revenue contended that the project completion did not meet the prescribed timeline, questioning the eligibility for the deduction. The assessee's counsel refuted this claim, presenting evidence from the record to support timely completion. The Tribunal reviewed the facts, including findings from previous assessment years, and concluded that the Revenue failed to provide contrary evidence to challenge the completion timeline. As a result, the Tribunal dismissed the Revenue's appeal, upholding the decision to allow the deduction u/s.80-IB(10) for the assessee.

This summary provides a detailed analysis of the legal judgment, addressing each issue involved comprehensively while maintaining the essential legal terminology and significant phrases from the original text.