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TMI Blog2015 (10) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... om them. Agreements entered by such buyers with the assessee for construction of residential units were separate. These aspects have not been looked into by the AO. These were very relevant in deciding whether the assessee was a developer or only a contractor. When the AO does not make the enquiries that is lawfully expected of him and which any prudent man would have done, if placed in similar circumstances, it would definitely render the order erroneous and prejudicial to the interests of Revenue. Not only was there units which had built-up area in excess of 1500 sft, but also the agreements and the power of attorney did have a bearing on the question as to whether assessee was indeed eligible for claim of deduction u/s.80IB(10) of the Act. AO had never considered these aspects nor made enquiries which were required of him. No doubt inadequate enquiry by itself will not render an order erroneous or prejudicial to the interests of Revenue. But an enquiry which by itself is only a farce and does not do justice to the duty cast on a statutory authority would be equivalent to non-enquiry. No error in the order of CIT in considering the order of AO erroneous and prejudicial to the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential units and ownership over the land on which construction was being done. CIT noted that for A. Y. 2010-11 based on the report of DVO, AO had denied the deduction claimed by the assessee u/s.80IB (10) of the Act. Assessee was considered as a building contractor and not as a developer. Since for A. Y. 2010-11 the claim of deduction u/s.80IB(10) of the Act was denied, as per the CIT for the impugned assessment year also such claim could not be allowed, project being the very same. Assessee in reply to the above mentioned notice stated that it had two residential projects namely County-1 and County-II. According to it claim for which deduction u/s.80IB(10) of the Act was restricted to County-I. As per the assessee in respect of five units which were found by the DVO as having builtup area in excess of 1,500 sq.ft, he was not clear as to whether it were a part of County I or County II. Further as per the assessee, it had never acted as a building contractor and no money was received from the land owner for construction. Assessee pointed out that it was in possession of GPA for the land, having all powers to develop the land. As per the assessee, the consideration of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R relying on the judgments of Hon ble Gujarat High Court in the cases of CIT v. Radhe Developers [341 ITR 403] and CIT v. Shree Ram Construction [TA.430 of 2013, dt.10.12.2012], submitted that such ownership over the land was not an essential criteria. As per the Ld. AR, owner of the property had parted possession of the land and assessee was the person who was developing it. Owner had given a GPA which included power to sell the land. It was the assessee who was doing the construction. Assessee was a developer of the residential units and therefore by virtue of the above mentioned judgments, assessee was eligible for claiming deduction u/s.80IB(10) of the Act. CIT had refused to follow the coordinate bench decision in the case of Brigade Enterprises (P) Ltd (supra) though an SLP filed on the very same issue by the Revenue before the Apex Court stood dismissed. Further according to him during the course of assessment proceedings, AO had enquired about the aspect of ownership and was satisfied with the replies given by the assessee. Thus according to him, order of the AO was neither erroneous nor prejudicial to the interests of the Revenue. 06. Per contra, Ld. DR strongly support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10). Therefore you are requested to show cause why the deduction u/s.80IB(10) of ₹ 5,09,35,824/- claimed by you should not be disallowed and brought to tax as your firm s income. 08. Assessee s reply to this, if any, is not available on the records. However, in the original assessment order dt.23.09.2011 there is a mention regarding the claim made by the assessee u/s.80IB(10) of the Act, and this read as under 2. The assessee firm having two projects one is covered by 80IB and another one is non 80IB. On comparison of cost of project per sq.ft., the cost of project in respect of 80IB case (county I) comes to ₹ 2.981/- per sq.ft. and cost of non 80IB project (county II) comes to ₹ 3,950/-. The assessee has been asked to explain the same vide this office letter dated 16.06.2011. In response to the above, the assessee's AR has explained vide his letter dated 18.08.2011 which is filed on 23.09.2010 stating that the cost of non 80IB project is more because it is a premium construction with good quality fittings and better amenities and interiors. The area of construction is more in respect of 80IB project and area of construction in respect of non 90IB pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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