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TMI Blog2019 (2) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... lds a housing project. The Section clearly draws the distinction between 'developing' and 'building'. In the preceding paragraphs, we have noted the factual position as could be culled out from the joint venture agreement, which clearly shows that the assessee is the developer and M/s.ETA is the builder and mutual rights and obligations are inextricably linked with each other and undoubtedly, the project is a housing project thereby, the assessee would be entitled to claim deduction under Section 80IB (10) of the Act. Thus, for the above reasons, we hold that the Tribunal erred in reversing the order passed by the CIT(A). We find that the authorised representative, who appeared on behalf of the assessee has specifically stated that there is no case of double deduction and it is only proportionate to their respective shares. We find that the Tribunal has not given any finding as to any double deduction and therefore, such a plea cannot be canvassed before us in this appeal. - Appeal filed by the assessee is allowed - Tax Case Appeal No.177 of 2018 And C.M.P.Nos.2376 and 2377 of 2018 - - - Dated:- 30-1-2019 - Mr. Justice T.S. Sivagnanam And Mr. Justice N. Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 115JB of the Act at ₹ 27,79,97,773/-. The Assessing Officer while completing the assessment, disallowed the claim of deduction under Section 80IB(10) of the Act on the ground that the assessee had not executed/developed a housing project, inasmuch as by contributing 2/3rd of its land holding to M/s.ETA Properties Investments P Ltd. ( M/s ETA ) in exchange for 73 flats. The Assessing Officer concluded that the assessee has not taken any investment risk. Further, the Assessing Officer had noticed the sale of two flats exceeding 1500 sq.ft., and in any event, eligibility for such deduction in relation thereto was not complied with. 3.2.The assessee filed an appeal before the Commissioner of Income-tax (Appeals)-I, Chennai (for brevity the CIT(A)). The CIT(A), by order dated 24.03.2015, allowed the appeal and directed the Assessing Officer to re-work the eligibility of deduction under Section 80IB(10) of the Act. With regard to the violation of build up area for two flats, which exceeded the prescribed limit of 1500 Sq.ft., the CIT(A) upheld the decision of the Assessing Officer. The Revenue filed an appeal challenging the order passed by the CIT(A) before the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the developer/promoter in the project. This question was answered in favour of the assessee, after noting the factual position as to the activities undertaken by the assessee. At this juncture, it would be beneficial to refer to paragraph 8 of the said judgment, which reads as follows:- 8. In terms of the agreement, which are not in dispute, the assessee not only undertook the aforesaid development activities on the land in question, but in fact, he entered into an agreement of sale with the owners of the land, paid the entire consideration but he did not take a registered sale deed in his name. On the contrary, the procedure adopted is he in turn entered into a joint development agreement with the builder and the owner of the land was made a party to the said proceedings. Thus, the assessee contributed the land, undertook the aforesaid developmental activities in the said land and thus, complied with all other conditions, which have to be fulfilled before claiming benefit under Section 80IB (10) of the Act. The builder has invested the money in the construction. It is after completion of the building in terms of the agreement, the assessee was given 22% share of the building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied with all the conditions, thereby being entitled to the benefit under Section 80IB(10) of the Act. The assessee in his explanation to his Assessing Officer, vide letter dated 20.03.2013, stated that the company has incurred initial expenses towards the housing project like architect fee, plan reclassification charges, construction expenses, project administrative expenses etc. The Tribunal states that the expenses are not reflected in the P L account. However, this aspect was considered by the CIT(A) and by referring to the P L account, stated that the assessee has not taken the cost of the land into consideration thereby claiming more surplus income for the purpose of 80IB(10) benefit. Further, the CIT(A) noted that the assessee has shown only increase in work-in-progress of ₹ 2.22 crores along with some minimal expenses in its P L Account, but this has nothing to do with the cost of the land alone. This aspect of the matter has not been dealt with by the Tribunal, but the Tribunal made a sweeping observation that the expenses are not reflected in the said account. Therefore, we do not agree with the reasoning given by the Tribunal in this regard. 9.A Divisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the favour of the assessee therein, in the following terms:- 30. The essence of sub-section (10) of Section 80IB, therefore, requires involvement of an undertaking in developing and building housing projects approved by the local authority. Apparently, such provision would be aimed at giving encouragement for providing units in the urban and semi-urban areas, where there is perennial and acute shortage of housing, particularly, for the middle income group citizens. To ensure that the benefit reaches the people, certain conditions were provided in sub-Section (10) such as specifying date by which the undertaking must commence the developing and construction work as also providing for the minimum area of plot of land on which such project would be put up as well as maximum built up area of each of the residential units to be located thereon. The provisions nowhere required that only those developers who themselves own the land would receive the deduction under Section 80IB (10) of the Act. 12.The said decision in Radhe Developers (supra) was followed by the High Court of Gujarat in CIT vs. Moon Star Developers, (2014) 88 CCH 0211 GujHC; and in the case of CIT vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court of MP in the case of Navratan Techbuild Private Ltd. vs. CIT, (2014) 88 CCH 0264 MPHC, wherein, the Court while considering the claim for deduction under Section 80IB(10) of the Act, held that there was no substantial question of law involved in the said appeal. 19.We have noted the facts in the said case and hold that the assessee having not constructed residential flats and barely raising infrastructural facility would not raise any substantial question of law requiring adjudication. In the light of the factual position involved in the said case, the said decision can have no application to the case on hand. 20.Mrs.R.Hemalatha, learned Senior Standing Counsel reiterated that the Tribunal has recorded that there is no expenditure incurred by the assessee as could be seen from the P L Account. As pointed out earlier, this aspect was specifically considered by the CIT(A) in the following terms in paragraph 4.2.1 of the order dated 24.03.2015, which is as follows:- 4.2.1. As seen from the facts of the case, the appellant cannot be denied deduction u/s 80IB(10) as it otherwise fulfills all the conditions. However, as seen from the P L the appellant has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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