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TMI Blog2017 (3) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 143(1) of the Act on 14.10.2008. Thereafter the case of the assessee was selected for scrutiny and the statutory notices under section 143(2) and 142(1) was issued and served upon the assessee. The assessee company is a Developer and engaged in the business of Development and construction. During the year under consideration the assessee company has developed second phase of project at Dharavi, Mumbai for Slum Rehabilitation Authority. The appellant entered into a MOU dated 27.05.2002 with Shri Momi Maneckji Netarwalla for purchase of plot of land admeasuring 15096Sq Mtrs for a consideration of Rs. 1,75,00,000/- which was later on reduced to Rs. 1,65,00,000/- when the area of land was found to be 12298 Sq Mtrs. Thereafter Mr Bomi Maneckji Netarwalla (Vendor) , the Mukon Construction the assessee and Slum Rehabilitation Authority (SRA) entered into an tripartite agreement where under the assessee was to construct rehabilitation tenements of the size admeasuring 225 Sq Fts on the said land which was approved by the SRA which would be surrendered free of cost to SRA for rehabilitation of slum dwellers who encroached the land. The assessee developer would receive the TDR as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SRA) viz., the benefit that it has received in the form of Slum Transfer of Development Right (TOR) & from issuance of Development Right Certificates (DRC). The same relevant clause (vii) & clause (ix) are reproduced as below:- "vii) The Developers have offered SRA, a package deal of surrendering free of cost in lieu of grant of slum TOR the constructed rehab units on the portion of the open plot within the said entire property bearing C.S.No.316 (pt.) and delineated on the plan thereto annexed as Annexure '8' thereon surrounded by a red coloured. boundary fine herein after called "the said property" and more particularly described in the Second Schedule hereunder written. ix) The Deputy Directors of Town Planning SRA have accepted the proposal from the Developers and has approved the scheme in principle on the said property. as Slum Rehabilitation Scheme under clause 3. (1 of Appendix IV of DCR No.33(10) sanctioned by the Govt. under UOO Resolution NO.1095/1029/CR273/95/UD-11 dated 15.10.97 against which SRA snail give benefit of Transfer of Development Right (slums) (hereinafter called TOR) and cause to issue Development Right. Certificates (slums) (hereinafter ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant on the other r hand has argued that it was a developer having a principal to principal relationship with the SRA and was not executing a works contract. 4.5. Section 80 IB of the Income Tax Act makes it very clear that the deduction is available to a developer and not to a contractor. The explanation after subsection (10) of section 80 IB has been inserted so as to provide that nothing contained in this subsection shall apply to any undertaking which takes the housing project as a work contract awarded by any other person (including Central or State Government). Under the circumstances it is to be seen whether the appellant fell in the current category of a contract or a developer as this benefit is not denied to a developer but only to a contractor. In the first instance it is very necessary to see whether the applicant fulfils the conditions of the said section that is 1. whether the appellant is the owner of the land. 2. Who is the actual developer i.e. who is the actual person undertaking the investment risk as any person undertaking just contract risk is not entitled to tax benefits. Investment is important to take benefit under section 80 IB (10) of the Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant with the payments being subject to the TDR received by the appellant from the SRA for the work done as per terms and conditions. It therefore clearly stands that the assessing officer is very correct in concluding that what .the appellant had was a works contract for which it received fixed amount of 'TDR. It is immaterial that the TDR was sold at a greater value in the open market by the appellant. It is also seen from records that the appellant simply held the land in its name on behalf of the SRA. The appellant never had the rights of the actual/veal owner of the property. It did not have the right to cancel the contract with the SRA and develop the land according t; its own plans/initiatives. 4.7. I am therefore totally in agreement with the observation of the AO that the contract that the appellant was undertaking was a works contract wherein the appellant had no actual risks of an investor. It is also to be considered that the contract entered into by developers and builders are treated as works contract both for VAT as well as service tax purposes. Under the circumstances I am not inclined to interfere with the findings of the assessing officer. The action of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificates and evidences also substantiated that the assessee was entitled to TDR as issued by SRA in the name of the assessee as a consideration for the project executed for SRA. The ld. AR in defence of his arguments relied on the following case law: A) Ramesh Gunshi Dedhia V/s ITO(2014) 148 ITD 356; B) ACIT V/s Smt C Rajini - 9 Taxman.com 115 (Chennai-ITAT); C) CIT V/s Radhe Developers (2008 23 SOT 420) (Ahd); D) CIT V/s Radhe Developers (Guj) High Court E) Unity Infra projects V/s DCIT(ITAT Mum) decided on 10.10.2014; F) ITO V/s Saubhagyalaxmi Developer (ITAT Pune) decided on29.1.2016 and G) ITO V/s Sonasha Enterprises (ITAT Mumbai) 5. On the other hand, the ld. DR relied heavily on the orders of authorities below and prayed before the bench that the order passed by the ld.CIT(A) should be upheld. 6. Heard both the parties at length, perused the material placed before the Bench including the orders of authorities below as well as the orders relied upon by the assessee. The facts on records reveal that the assessee received TDR from SRA on rate contract awarded by the Govt. of Maharashtra for which the commencement certificate dated 15.9.2003 was issued in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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