9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (2) TMI 168 - AT - Income TaxAllowability of deduction u/s.80IB(10) - whether the assessee can be called as a developer within the meaning of sec.80IB(10) read with Explanation I herein above? - Held that - The assessee is engaged in the construction work of buildings as a contractor and when the assessee s job includes only controlling and directing the work of building construction as per plan and design by the land lord and hand over the constructed flats on behalf of the land lord to the eligible flat owners who have got registered undivided right in the property. It is only performed the work as a contractor and the assessee s job is not included designing the project and selling of the project and the assessee would not get any share in the constructed area and in the undivided property and the assessee cannot be said to have invested its own money to carry on the project. Similar view has been taken by the Tribunal, Indore Bench in the case of M/s. Sky Builders & Developers vs. ITO 2011 (8) TMI 722 - ITAT INDORE for the assessment year 2006-07. The assessee is not eligible for deduction u/s.80IB(10) of the Act. The various case law relied on by the ld. AR is not applicable to the facts of the present case, as those judgments were delivered on its own facts - Decided against assessee.
Issues Involved:
1. Allowability of deduction under section 80IB(10) of the Income Tax Act. Issue-wise Detailed Analysis: 1. Facts of the Case: The assessee filed a return of income for the AY 2011-12, declaring a total income of 'Nil', and later revised the return claiming a deduction under section 80IB(10) amounting to ?17.35 crores. The case was selected for scrutiny, and the Assessing Officer (AO) disallowed the deduction, adding ?17.35 crores to the income. The assessee appealed to the Commissioner of Income-tax (Appeals) [CIT(A)], who upheld the AO's decision. 2. CIT(A)'s Observations: The CIT(A) observed that the assessee, a partnership firm involved in construction, did not show any agreement or transfer of land owned by the partners to the firm. The land was purchased by individuals in 2005, and no capital gains were recorded from the transfer of land. The CIT(A) noted that the sale agreements and deeds were executed by a power of attorney agent of three landowners, and the firm did not acquire any legally vested ownership rights in the land. The CIT(A) concluded that the firm acted as a contractor and not a developer, making it ineligible for the deduction under section 80IB(10). 3. Assessee's Arguments: The assessee contended that the CIT(A) erred in confirming the AO's decision. The assessee argued that the firm is a developer, not merely a contractor, and all partners owned the property in their individual capacities before forming the partnership. The assessee relied on the Supreme Court judgment in Malabar Fisheries Co. Vs. CIT, asserting that the firm need not own the land to claim the deduction. The assessee also cited a previous Tribunal decision in its favor. 4. Tribunal's Analysis: The Tribunal examined whether the assessee qualifies as a developer under section 80IB(10). The Tribunal referred to various judgments and definitions, distinguishing between a developer and a contractor. A developer designs and creates new products, whereas a contractor executes work assigned by the developer. The Tribunal found that the assessee entered into agreements with landowners and prospective buyers, acting as a contractor rather than a developer. The Tribunal noted that the assessee's primary revenue came from construction contracts with flat owners, not from developing the housing project. 5. Conclusion: The Tribunal concluded that the assessee is a contractor and not a developer, as it did not undertake the development of the housing project as a whole. The assessee's role was limited to constructing flats as per agreements with flat owners, without owning the land or designing the project. Therefore, the assessee is not eligible for the deduction under section 80IB(10). 6. Final Decision: The appeal of the assessee was dismissed, and the disallowance of the deduction under section 80IB(10) was upheld. Order Pronounced: The order was pronounced on 25th January 2017 at Chennai.
|
