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TMI Blog2024 (8) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court. It is also brought to the notice of the Bench that operation of the judgment of Hon ble jurisdictional High Court has been stayed by the Hon ble Supreme Court. Accordingly in the facts and circumstances of the case where one of the issue is pending adjudication before Hon ble Supreme Court and other requires fresh adjudication after verification and examination of the supporting evidence to be filed by the assessee the matter is set aside to the record of the AO for afresh adjudication after proper verification and examination of the supporting evidences if any to be filed by the assessee to show that the sale deed of plots were executed only with a view to facilitate the buyers to take loans from the banks. Further the issue of completion certificate has to be decided as per outcome of the judgment of Hon ble Supreme Court. Appeal of the assessee is allowed for statistical purposes. - Shri Vijay Pal Rao, Judicial Member And Shri B.M. Biyani, Accountant Member For the Assessee : None For the Revenue : Shri Ashish Porwal, Sr. DR ORDER PER VIJAY PAL RAO, JM : This appeal by assessee is directed against the order dated 27.05.2016 of the Commissioner of Income Tax (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate housing project and other documents in the name of developer, which, elearly show the fact that appellant is a developer. 5) The Learned CIT (A) has erred in law and on facts in denying the Deduction 80IB (10) of the Income Tax Act. 1961 for the reason that Building Permissions for the construction of houses in the project was taken in piecemeal instead of permission for construction of all the houses together as per the plan of the project approval, ignoring the explanation | of Section 80IB (10) Clause A. 5) That the appellant reserves the right to add. alter or amend the grounds of appeal before the appeal is decided, with the permission of Honourable Bench. 3. The assessee filed his return of income on 23rd September 2009 declaring total income of Rs. 3,70,010/- and agricultural income at Rs. 2,68,749/- after claiming deduction u/s 80IB(10) of the Act to the tune of Rs. 67,30,612/-. In the scrutiny assessment the AO found from the audit report that during the year under consideration the assessee has claimed to continue developing a house project namely Dwarka Garden and Madhuban Residency, Sagar . The AO further noted that the assessee has sold the plots of land to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try Planning Board for development of Dwarika Vihar and the map approved by the authorities have two phases i.e. Phase-I and Phase-II. However, due to dispute in respect to Phase-II portion of land, the case for possession of Land was filed before the court and court has passed a decree on 27/02/2009 where it was directed to handover the portion of relevant portion after due measurement, to appellant. Despite the court orders seller of land case did not co-operated in measurement of land as a result of which correct demarcation of land could not be done and in the mean time one of the land owner in that case also filed a petition before the court. The appellant was again left with no option but to again approach the court for execution of decree and also filed petition on 17/12/2012 for execution of decree and matter is still sub-judice. Consequently, appellant could not commence any activity for Phase- II of approved project. However, Phase- I of the project was duly completed by the appellant and all the conditions including area of land as required u/s 80IB(10) were met, Land comprised in Phase I was 1.95 Acres. The appellant has claimed deduction u/s 80IB(10) for Phase- I as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT(2013)29 Taxmann.com 19 (Madras) 2) CIT v/s Sreevasta Real Estate Pvt Ltd (2014) 42 Taxmann .com 329 (Madras) 3) CIT v/s Arun Excelo Foundation Pvt Ltd (2013) 29 Taxmann.com 149 (Madras) 4) GV Corporation v/s ITO Mumbai (2010) 38 SOT 174 (ITAT Mumbai) 5) CIT v/s Brahma Associates (2011) 197 Taxmann 459 (Bombay) ISSUE-11- ASSESSEE IS A BUILDER OR CONTRACTOR. It is also important to note that the section 80IB(10) of the Income Tax act 1961, nowhere provides any condition that at what level transfer to the customer should be registered or even it should be registered at all. What is required is the development of a housing project. Therefore, the contention of the A.O. that the appellant is a contractor is without any basis or evidence. Merely a registration of plot comprised in the house, in the name of customer shall not make the builder developer , a contractor , when the appellant has developed an approved township and sold and gave possession of completed residential houses to the customers. Thus it is important to note that the appellant in given case has given a specific reference to fact that registry of plot has been done in compliance to agreement and the fact of deliver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal. 5. Having considered the rival submissions and careful perusal of the record we find that the AO denied the claim of deduction u/s 80IB on two grounds that the assessee has not developed a housing project but he has simply constructed houses owned by buyers in whose favour the sale deed was executed by the assessee prior to the construction of the houses. We find that this fact has not been disputed by the assessee that the assessee has first sold the plots of land to the individual buyers and thereafter constructed houses on it as per agreement with the buyers. Once the land was sold by the assessee and transferred in the favour of the buyers through the registered sale deed then prima facie the assessee was no more having any title over the land or right or interest in the said land. The assessee has taken plea that the sale deeds were executed in favour of the buyers in order to allow the buyers to take loans from the bank and financial institutions however, this is mere a contention on behalf of the assessee which is not substantiated by any corroborating evidence of actual instance of taking loan by the buyers from bank or financial institutions to finance the constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an of such housing project is first approved by the local authority (ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of sir housing project is issued by the local authority: Form the above provisions it is evidently clear that deduction 80IB(10) of the Act is allowable on the profits derived from developing and building housing project as approved by the Local Authority. As per Clause (a) of Section 80IB(10) of the Act, the construction of the project as approved by the Local Authority shall have to be completed within specified time which in this case was 11.03.2013. there is no ambiguity in the provisions of Section 80IB(10) of the Act, specially clause (a) that construction of the whole of the project as approved by the Local Authority Shall have to be completed on or before the specified date. It is admitted fact in this case that the appellant had not completed the construction of the project as approved by the Local Authority ie. Municipal Corporation Sagar. The appellant had completed construction of a part of the project only mentioned as Phase-f and it is admitted by the appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 339; ) Thus the contention of the appellant that he hand not handed over the possession of the plots after selling the same to the customers is not found correct. The appellant had already sold plots of land to the customers and thereafter he had acted only as a contractor for the completion of construction of the residential units. It is also pertinent to note that the agreements claimed to be entered with customers were not registered. These agreement were not even notarized. In view of provisions of Section 17(1A) of the Registration Act 1908, on cognizance can be given to such arguments which not even notarized for transfer of property. Thus the appellant had acted as a work contractor. It also be mentioned here that the ratio of decision of Hon'ble ITAT in the case of SKY Builders Developers Vs. 1101(1), Bhopal (2011) 14 taxmann com 78 (Indore- tribunal) is squarely applicable to the facts of the instant case as the facts involved in that case were similar to the facts involved in the instant Case In the case of M/s Sky Builders Developers (Supa) also the project was approved in the name of Sky Builders Developers. The assessee has sold the plots to various customers by re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing project. Once the plots of land were sold then the assessee has lost his status of owning the project much less the development of housing project unless some contrary is brought on record. Therefore, this is requires to furnish the evidence to substantiate the claim that the sale deeds were executed only to facilitate the buyer to take loan from banks/financial institutions. 5.2 So far as the issue of completion certificate is concerned this issue is pending adjudication before the Hon ble Supreme Court in case of Global Reality decided by the Hon ble jurisdictional High Court against the assessee in 379 ITR 107 and further appeal is pending adjudication before the Hon ble Supreme Court. It is also brought to the notice of the Bench that operation of the judgment of Hon ble jurisdictional High Court has been stayed by the Hon ble Supreme Court. Accordingly in the facts and circumstances of the case where one of the issue is pending adjudication before Hon ble Supreme Court and other requires fresh adjudication after verification and examination of the supporting evidence to be filed by the assessee the matter is set aside to the record of the AO for afresh adjudication after p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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