Case Law Details
ACIT Vs M/s Yug Corporation (ITAT Ahemdabad)- The assessee (developer), having dominant control and rights over the land for developing and building a housing project, as approved by a local authority, cannot be denied the deduction under s 80-IB(10) merely because of the absence of legal ownership of the land.
The learned Counsel for the assessee referred to the terms of the development agreements and the agreement to sell (copies filed on record) with both the societies, according to which the responsibilities of the assessee have been analysed in such manner that planning, sanction of plan, work of construction, development of the property, engagement of labourers etc. have to be done by the assessee. It was also provided that the assessee would receive the entire sale consideration of the housing units and the assessee shall be entitled to accept the payments from the members/ buyers.
The documents on record also provided that the assessee shall provide payment for construction, engage architect etc. and shall obtain permission from AUDA. The assessee shall make all financial arrangements for the purpose of implementing housing project. The assessee shall have all the rights, titles and interests in the housing project and the profit/loss to the assessee out of the housing project will remain with the assessee and the assessee shall be solely responsible for the outcome of the housing project. The assessee would incur all the expenses for completion of the housing project with all common facilities. Since, the agreements to sell provide that the property in question is transferred by the societies to the assessee for sale consideration; therefore, it would prove that the assessee made the payments of sale consideration of the property in question to the societies. The assessee recorded all the sale proceeds in its books of accounts as is demonstrated by the learned Counsel for the assessee. The above facts would prove that the assessee entered into agreements to sell and development agreements with the societies for consideration. All the responsibilities for carrying out the construction, permission and development of the housing project lie with the assessee. The real owners of the land were only to cooperate with the assessee developer in carrying out development and also to execute documents whenever required by the assessee as developer. The real owners have also handed over physical possession of the property in question to the assessee as a builder for carrying out the development project. Thus, the land owners were not left with any right, title or interest in the development which was carried out solely by the assessee. The motive of the real owners of the land in question was not to develop; construct or carrying out any business as a builder or developer of project and no right is left in this behalf. For all intent and purposes, the assessee has acquired dominant right over the land and the assessee could deal in the land in any manner in which the assessee might have liked. The terms & conditions entered into between the assessee and the societies as per the development agreements and the agreements to sell provided all dominant control and right over the land to the assessee and the assessee developed and constructed the housing project at its own costs and risks and shall remain owner of the buildings without any interference from the land owners. The development agreements and the agreements to sell do not provide that the assessee would work as contractor or agent on behalf of the societies. The facts of the case, if considered, in the light of the decisions of the ITAT Ahmedabad Benches in the cases of M/s. Radhe Developers, Shakti Corporation and M/s. Amaltas Associates (supra), we are of the view that the issue is fully covered by the above decisions of the Tribunal in favour of the assessee because the assessee has acquired dominant right over the land and has developed the housing project by incurring all the expenditure and by taking all the risks involved therein. The crux of the matter would be that the assessee has purchased the land in question and has developed the housing project at its own costs within the parameters as provided u/s 80 IB (10) of the IT Act, therefore, we are of the view that the learned CIT(A) was justified in holding that the assessee is entitled for deduction u/s 80 IB (10) of the IT Act. All the objections of the AO have been considered correctly by the learned CIT(A) and rightly decided the issue in favour of the assessee. The other conditions of section 80 IB (10) of the IT Act are not disputed by the AO. The same view is taken by ITAT Ahmedabad Bench in the case of M/s. Safal Associates (supra). Considering the facts of the case in the light of the above decisions, we are of the view that the assessee fulfilled the conditions and requirements of section 80 IB (10) of the IT Act, therefore, the claim of the assessee for deduction u/s 80 IB (10) of the IT Act should not have been refused by the AO. We accordingly, do not find any infirmity in the order of the learned CIT(A) in directing the AO to allow deduction u/s 80 IB (10) of the IT Act to the assessee. There are no merits in the departmental appeals.
When the assessee-company pays the entire consideration and also takes possession of the property, it would be the de facto owner irrespective of the registered documents
IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH – AHMEDABAD
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