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TMI Blog2012 (10) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... s, which could not be termed as profits 'derived' from developing ad building housing projects in terms of this provision. 2. At the outset, we have been informed that rest of the grounds of the Revenue are argumentative in nature and in support of the substantive grounds raised. 3. An assessment was made u/s.143(3) of the Act dated 22/12/2008 according to which the assessee-firm was stated to be in the business of construction of a housing project. AO has made an elaborate discussion and thereafter he has concluded that the land did not belong to the assessee-developer and that the approval by the local authority for the construction of the said housing project was not in the name of the assessee and that the beneficial ownership was also not in the name of the assessee, hence the assessee did not have the exclusive domain over the project. After assigning these reasons, AO has held that there was infringement of the provisions as prescribed u/s.80IB(10) of IT Act. An another reason for the disallowance as stated by the AO was that although the construction activity was carried out by the assessee but without fully utilizing the permissible floor space index (FSI). Resultantly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant than also it will not affect this development agreement. * It is confirmed by the landlords that this piece of land is not sold to any other party in any manner and title of the property is clear and marketable. And based on that after deciding to sell the same to the appellant, this agreement or development is entered into. * Whatever construction is being carried out will belong to the appellant only and land owners will have right to the extent of sale consideration of land only. * By virtue of this deed, the appellant is entitled to assign to third party all the rights which are given by this deed and landlord will co-operate in such assignment subject to condition listed in this agreement. * The land lords will have right to the extent of sale consideration of plot of land only and based on this agreement, if any liability arises on account of income tax for other than sale consideration of plot of land then it will be of the appellant. * If revised permission is required by the appellant than it is to be obtained but at the cost of the appellant only and land owners will sign all documents when ever required. From the above it can be seen that the control over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal with the land for a consideration payable within a stipulated time; that the assessee had been put in possession of the land on the terms and conditions as mentioned in these two Agreements; that the assessee-firm has also paid consideration of Rs.56 lacs during the two Financial Years; i.e. 2000-01 & 2001-02; that the assessee-firm has to obtain necessary approvals from the local authorities; i.e. BMC on behalf of the land-owners and all the expenses for such purposes are to be incurred by the assessee; that the assessee-firm has engaged the firm of Architect and also incurred expenses towards the charges payable to Corporation, etc. for obtaining the approvals; that even from the books of account, it is noticed that for obtaining the approval, the assessee-firm has paid the developmental charges to various regulating agencies, i.e. VUDA, BMC and GEB (Gujarat Electricity Board), etc.; and that these expenses are incurred by the assessee-firm and the Assessing Officer has brought out the complete details year-wise in his assessment orders at page No.5 reading as under:- Sr.No. Particulars Financial Year Amount (Rs.) 1. VMC charges paid to Vadodara Municipal Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, it could not be a developer. We fail to understand as to how such a situation could emerge. A person who enters into a contract with another person is no doubt a contractor. Having entered into agreements with landowners for development and building the housing project, was obviously a contractor but it does not derogate the assessee for being a developer, as well. The term contractor is not essentially contradictory to the term developer. As stated above it is the undertaking that develops or builds the housing project that is entitled to deduction irrespective of the fact whether that it is the owner or not or whether it is the contractor thereof. The requirement for claiming deduction is that such an undertaking must develop and build housing project, be it on their own land or on the land of others and for which a tripartite agreement has been entered into for development and building housing project; or be the assessee a contractor for developing and building housing project or an owner of the land. 45. Therefore, look at from any angle, we are of the considered opinion, that to claim deduction for developing and building housing project, it is not necessary that assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lot of land. Further, on verification of development agreement with the landowner, we find that here also the reference is with respect to land area only. In both the documents assessee had not acquired rights and has not relinquished rights with reference to FSI. Further, on verification of approved map for each unit is with reference to built up area only. Under the circumstances, the assessee has never dealt with FSI, both in terms of acquiring rights in the land and for relinquishment of such rights in the land. The calculation given in approved plan is of maximum permissible FSI and by giving such calculation it is not made mandatory by any provisions of any Act to make construction to the fullest extent of maximum permissible FSI. The utilization of FSI by the builder developer depends on many factors like situation of plot, the type of locality, and the type of buyers' affordability. It is the market force, which determines the average size of the residential unit - a commercial decision, which prevails for the purpose of carrying out the business and for making residential units and not the permissible maximum FSI. It would also be impossible to construct any housing unit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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