Case Law Details
Pr. CIT Vs Green Associates (Gujarat High Court)
It was held that the assessee had undertaken the development of housing project at their own risk and cost. The owner of the land had accepted the full price of the land. He was therefore not concerned with the successor or failure of the housing project. In such background, reference was made to the definition of term “transfer” under section 2(47) of the Act and held that merely because the land was held by the original owner when the housing development project was executed, would not be detrimental to the assessee’s claim of deduction under section 80IB(10) of the Act.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
1. These Tax Appeals arise in common background. We may record facts from Tax Appeal No. 1154 of 2018.
2. Revenue has filed this appeal against the judgement of the Income Tax Appellate Tribunal dated 13.02.2018 raising following questions for our consideration:
“(a) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in allowing the assessee the deduction u/s. 80IB(10) of the Act after treating the assessee as a developer of the Housing Project even though the project as a whole was not primarily developed and build by the assessee itself and the assessee has sold merely the residential plots and rest of the work has been completed by it as a contractor of the plot purchasers, rendering it ineligible for deduction u/s. 80IB(10) of the Act?
(b) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in allowing the assessee the deduction u/s. 80IB(10) of the Act by ignoring the fact that 70% of the sale proceeds of the project were the work contract receipts and no entrepreneurial and investment risk was taken by the assessee in respect of the project and therefore it cannot be held that the project as a whole has been developed and build by the assessee so as to make it eligible for deduction under section 80IB(10) of the Act as developer of Housing Project?”
3. The respondent is engaged in the business of housing development. For the assessment year 2010-11, the assessee had claimed deduction in respect to the income arising out of such activity under section 80IB(10) of the Income Tax Act. The Assessing Officer disallowed the claim mainly on the ground that the assessee was not the owner of the land and the approval of the project was not in the name of the assessee. The issue ultimately reached the Tribunal where the Revenue also contended that the assessee had not sold the residential house in the housing project but had sold the residential plots with construction upto plinth level. The assessee therefore cannot be considered as a developer of a housing project but was mere a contractor. The Tribunal followed its earlier judgement in case of similar assessee and confirmed the decision of CIT (A) allowing the claim.
4. Various issues arising out of the claim of different assessees under section 80IB(10) of the Act came to be thrashed out by a Division Bench judgement of this Court in case of Commissioner of Income Tax vs. Radhe Developers reported in 341 ITR 403. The Court took note of various development agreements executed by the assessee in favour of individuals claiming that they had been engaged in the activity of housing development. Revenue’s contention, that the nature of activities carried on by the assessees would only qualify them to be the contractors executing works contract, was also considered. It was held that the assessee had undertaken the development of housing project at their own risk and cost. The owner of the land had accepted the full price of the land. He was therefore not concerned with the successor or failure of the housing project. In such background, reference was made to the definition of term “transfer” under section 2(47) of the Act and held that merely because the land was held by the original owner when the housing development project was executed, would not be detrimental to the assessee’s claim of deduction under section 80IB(10) of the Act.
5. The case on hand does not present any new facts or legal contentions. Tax Appeals are dismissed.
