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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 ..... MAR, AM For The Assessee : Shri Prakash Jyotwani For The Revenue : Dr.Suman Ratnam ORDER PER RAJESH KUMAR, A. M: Appeal filed by the assessee pertains to the assessment year 2007-08 and is directed against the order dated 4.1.2011 passed by the ld.CIT(A)-12, Mumbai in which the assessee has raised the issue of confirmation of disallowance by ld.CIT(A) u/s 80IB(10) of the Income Tax Act, 1961 to the tune of ₹ 4,71,15,704/- as held by the AO on the ground that the development rights (TDR) from the Slump Rehabilitation Authority (hereafter called as SRA) was a work contract. The assessee also challenged the applicability of the provisions of section 80IB(10) of the Act to the case of the assessee. 2. The brief facts of the case are that the assessee filed its return of income on 31.10.2007 declaring taxable income of Rs. NIL after claiming deduction u/s 80IB (10) of ₹ 4,71,15,704/-which was processed under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act is to see if the work done by a person is a work done on his own chattel, or on the chattel of someone else. Lf it is on his own chattel and that the chattel is later on sold, then it is sale of goods , but if the work is done on the customer's chattel them it is works contract as stated in the case of S. V.Motor Co. Ltd. Vs. State of Mysore, (1964) 15 STC 771 (Mys). Further the context in which the word :chattel in the above paragraph used means Real Chattel as against Personal Chattel , such as concern real property, such as leasehold estates,' interests issuing out of, or annexed to , real estate; such chattel interest as devolve after the manner of reality. In the case of our above-mentioned client, it is clearly highlighted from the Deed of Conveyance dated 05.04.2003 that the assessee has a vested interest issuing out of, or annexed to, the development and building of housing project and then selling it to the Slum Rehabilitation Authority (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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 21.12.2009 assessing the total income of the assessee at ₹ 471,15,700 by rejecting the deduction claimed under section 80IB(10) of the Act on the ground that no deduction u/s 80IB(10) could be allowed to the assessee in respect of profit from a work contract. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld. CIT(A), who after considering the contentions and submissions of the assessee as incorporated in para 4.3 of the appellate order observed and held as under : 4.4. I have carefully considered the 'order of the assessing officer and the submission of the appellant. I find that the main dispute in the case is regarding grant of deduction under section 80 IB to the appellant, The assessing officer has; denied the same stating that as the appellant was executing the works contract the case of the appellant fell under the provision of .the explanation to section (10f) of section 80IB and therefore the deduction was not allowed to the appellant. The appellant 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 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its'. owner and then invested in the development project as an actual developer. The agreement clearly says that the appellant got the possession of the. said property for and behalf of the SRA with the right. to carry out construction of the tenements -and develop the same in accordance with the terms of the agreement dated the 5 April 2003. It has further been stated in the agreement that the development has to be carried out as per terms of agreement. The first confirming party has a special lien on the said possession which shall not be dlsturbed by SRA. A reading of the agreement also shows that it is for the SRA to convey this property to another after all the benefits of the TOH are given to the appellant. Therefore it stands that the ownership of the proper-ty was actually never of the appellant The appellant was orilv ,given development right in it by the original owner and after approachiriq the SRA under terms and conditions very clearly defined the oriqina] owner conveyed the property in the name of the appellant 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 stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estate, Dharavi placed at pages 92 to 96 of the paper book and a letter dated 17.12.2009 issued by Dy.Chief Eng.(DP)I, regarding issue of DRC for TDR generated in SRA on the land bearing CS No.316(pt) of Dharavi division Netrawala Compound/estate, Dharavi in favour of the assessee. The ld. AR submitted that in view of all these documents and evidences as referred to above it was abundantly clear that the assessee has received TDR from SRA in lieu of construction undertaken free of cost which was sold in the open market and profit generated thereon to the tune of ₹ 4,71,15,704/- were claimed under section 80IB(10) of the Act. Further, the ld. AR also controverted the findings of the FAA that explanation to section 80IB (10) was not attracted in the present cases as the assessee has not worked as works contractor but has received TDR from SRA as a consideration for carrying out construction of rehabilitation tenements free of cost under a contract awarded by the Govt. of Maharashtra for rehabilitation of slum dwellers and all the 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the present case the assesse was a developer in common parlance as well as legal parlance and could not be regarded as works contractor and accordingly the explanation to section 80IB inserted w.e.f. 1.4.2001 has no application as the project is not a works contract. Further the assessee was, in part performance of the agreement to sell was given possession of the land and had also carried out construction of housing project, it has to be deemed as owner u/s 2(47)(v) r.w.s. 53A of the Transfer of Property Act even though no formal title deed was executed. In the case of Unity Infra projects V/s DCIT(ITAT Mum) (SAupra), ITO V/s Saubhagyalaxmi Developer (ITAT Pune) (supra) and ITO V/s Sonasha Enterprises (ITAT Mumbai(supra) the coordinate benches have held that the profit from sale of TDR from SRA is eligible u/s 80IB(10) of the Act. We are , therefore, respectfully following the ratio laid down by the Hon ble Jurisdictional High Court and coordinate benches inclined to set aside the order of the ld.CIT(A) and direct the AO to allow deduction as claimed by the assessee. 7. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 14th Marc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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