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TMI Blog2014 (5) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners – Decided against Revenue. - Tax Appeal No. 335 & 348 of 2014 - - - Dated:- 7-5-2014 - Akil Kureshi And Sonia Gokani,JJ. For the Appellant : Mr. Nitinkmehta, Advocate ORDER ( Per : Honourable Mr. Justice Akil Kureshi ) 1.Revenue has challenged the judgement of the Income Tax Appellate Tribunal ( the tribunal for short) dated 13.9.2013 raising following questions of law : (A) Whether the tribunal is right in law and on facts to delete the disallowance of deduction u/s.80IB(10) made by the Assessing Officer? (B) Whether the Tribunal is right in law to ignore the following material aspects in the present matter : (i) The assessee is not the owner of the land and approval was not issued to it by the Local authority? (ii) The assessee entered into the project by a Development agreement with the land owner and construction was done as per the agreement and hence the assessee is merely a work contractor for the purposes of construction of the project? (iii) The Assessee has not sold any unit to the purchaser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's claim for deduction under Section 80IB(10) of the Act. The Assessing Officer was of the opinion that the assessee firm was not the owner of the land. Approval by the local authority as well as permission to develop the project and permission to commence construction were not in the name of the assessee firm. The Assessing Officer was also of the opinion that the assessee had merely acted as an agent or a contractor for construction of residential houses. 6. The assessee carried the matter in appeal. CIT(Appeals) vide order dated 19.9.2006 rejected the assessee's appeal. CIT(Appeals) put considerable stress on the requirement of ownership of the land to qualify for deduction under Section 80IB(10) of the Act. He was of the opinion that the land is intrinsic and inalienable part of the housing project. No assessee, therefore, could carry on the business of undertaking developing and building housing projects without owning the land. 7. The assessee carried the matter further in appeal before the Income Tax Appellate Tribunal ( the Tribunal for short). The Tribunal vide its impugned judgment dated 29.6.2007 allowed the assessee's appeal and reversed the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions of development agreement and other documents on record, the Tribunal was of the opinion that the benefit of section 80IB(10) of the Act to the assessee could not be denied. 8.4 The Tribunal held that the assessee had acquired dominion over the land, which he had developed by constructing housing project incurring expenses and also taking risks. The Tribunal, however, observed that decision in the case of M/s. Radhe Developers would not apply in cases, where the assessee had entered into an agreement for a fixed remuneration and worked merely as contractor to construct the housing project on behalf of the land owners. In such a case, agreement between the assessee and the land owner would not permit the assessee to claim the benefit. 9. In the case of M/s.Shakti Corporation, since the assessee had produced documents on record, the Tribunal accepted its case for benefit under Section 80IB(10) of the Act. However, in group of other cases, which the Tribunal was disposing off by the said common judgment, such documents were not readily available. The Tribunal remanded the proceedings to the Assessing Officer with a direction that the Assessing Officer should look into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereon as per the plans approved by the local authority. It was specified that the assessee would bring in technical knowledge and skill required for execution of such project. The assessee had to pay the fees to the Architects and Engineers. Additionally, assessee was also authorized to appoint any other Architect or Engineer, legal adviser and other professionals. He would appoint Subcontractor or labour contractor for execution of the work. The assessee was authorized to admit the persons willing to join the scheme. The assessee was authorised to receive the contributions and other deposits and also raise demands from the members for dues and execute such demands through legal procedure. In case, for some reason, the member already admitted is deleted, the assessee would have the full right to include new member in place of outgoing member. He had to make necessary financial arrangements for which purpose he could raise funds from the financial institutions, banks etc. The land owners agreed to give necessary signatures, agreements, and even power of attorney to facilitate the work of the developer. In short, the assessee had undertaken the entire task of development, constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income derived from such property, the assessee would be the owner of the land for the purpose of the said Act. It is true that the title in the land had not yet passed on to the assessee. It is equally true that such title would pass only upon execution of a duly registered sale deed. However, we are, for the limited purpose of these proceedings, not concerned with the question of passing of the title of the property, but are only examining whether for the purpose of benefit under Section 80IB (10) of the Act, the assessee could be considered as the owner of the land in question. As held by the Apex Court in the case of Mysore Minerals Ltd. vs. Commissioner of Income Tax (supra), and in the case of Commissioner of Income-Tax vs. Podar Cement Pvt. Ltd. and others (supra), the ownership has been understood differently in different context. For the limited purpose of deduction under Section 80IB(10) of the Act, the assessee had satisfied the condition of ownership also; even if it was necessary. 42. In the case of Shakti Corporation similarly the assessee had entered into a development agreement with the land owners on similar terms and conditions. It is true that there were c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the term works contract defined in Section 2(1)(vi) of the Karnataka Sales Tax Act, which reads as under: 12. Section 2(1)(vi) is relevant. It defines a works contract as follows: 2.(1)(vi) 'works contract' includes any agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacture, processing, fabrication, erection, installation, fitting out, improvement, modification, repair or commissioning of any movable or immovable property; It is thus to be seen that under the Karnataka Sales Tax Act the definition of the words works contract is very wide. It is not restricted to a works contract as commonly understood i.e. a contract to do some work on behalf of somebody else. It also includes any agreement for carrying out either for cash or for deferred payment or for any other valuable consideration, the building and construction of any movable and immovable property . (emphasis supplied) The definition would therefore take within its ambit any type of agreement wherein construction of a building takes place either for cash or deferred payment, or valuable consideration. To be also noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said judgement, fresh appeals keep coming before us on this very issue. Till the appeals were pending before the High Court or even after the judgement was rendered, the department was further contemplating appeals before the Supreme Court, we could still appreciate the stand of the Assessing Officer to deny the benefits on the premise that the Revenue has not accepted the finality of the view. However, when no further proceedings are available to the Revenue, Supreme Court having finally repelled all such challenges, it is rather unfortunate that even today the appeals still keep travelling before us. In fact, the tribunal's judgement was rendered after this Court s judgement in Radhe Developers (supra). This appeal was filed long after the SLPs against such judgement came to be dismissed. In a recent judgement in case of Commissioner of Income-tax v. Excel Industries Ltd. reported in (2013) 358 ITR 295(SC), severely criticising such litigious approach of the department, for wasting public time and money. The distinction presented by counsel for the Revenue was not even drawn by the Assessing Officer. In the order of assessment all that is recorded is that the department ..... X X X X Extracts X X X X X X X X Extracts X X X X
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