Ambalal Nanalal Patel, Ahmedabad vs Department Of Income Tax

Date of pronouncement : 30/06/2015 ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 2 Asst. Years 2007-08, 2008-09 & 2009-10

ORDER

PER BENCH These appeals have been filed by the Revenue against separate orders of CIT(A) dated 5th March, 2013, 15th June, 2011 and 16th July, 2012. Since these appeals pertain to the same assessee these were heard together and are being disposed of by this common order for the sake of convenience.

1. ITA No.1744/Ahd/2013 Asst. Year - 2007-08 The following grounds are raised in this appeal :-

1a) The ld. CIT(A) -XV, Ahmedabad has erred in law and on facts in directing the Assessing Officer to allow the Assessee's claim for deduction of Rs.1,14,75,237/- u/s 80IB(10) of the I.T. Act.

1b) The ld. CIT(A)-XV, Ahmedabad has erred in law and on facts in not adhering to the Guidelines in its full spirit laid down by the Hon'ble Gujarat High Court in the case of Radhe Developers as extracted by the Hon'ble ITAT.

1c) The ld. CIT(A)-XV, Ahmedabad has erred in law and on facts that all the expenses were borne by the Builder on behalf of the Dhanvihar Co-op. Housing Society Ltd.

1d) The ld. CIT(A)-XV, Ahmedabad has erred in law and on facts that the Memorandum of ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 3 Asst. Years 2007-08, 2008-09 & 2009-10

Understanding/Development Agreement have been executed before the registration of the Dhanvihar Co-

op. Housing Society Ltd. and even before the Sale deed of land.

1e) The ld. CIT(A)-XV Ahmedabad has erred in law and on facts that the Assessee himself argued before the CIT(A) that total control of the scheme is of the first part and third part of Development Agreement. First part consists of (i) Shri Ambalal Nandas Patel, (ii) Smt. Bhikhiben Ambalal Patel, (iii) Shri Dineshkumar Ambalal Patel and (iv) Shri Pankajkumar Ambalal Patel, whereas deduction u/s 80IB (10) of the Act, was claimed by only Shri Ambalal Nandas Patel.

1f) The ld. CIT(A)XV, Ahmedabad has erred in law and on facts that development agreement is silent on the point that who has given authority to fixing the price of land/unit as all the expenses were borne by the Builder on behalf of the Society.

2) On the facts and circumstances of the case, the ld.

CIT(A) XV, Ahmedabad ought to have upheld the order of the Assessing Officer.

3) It is therefore, prayed that the order of the ld. CIT(A) XV, Ahmedabad may be set aside and that of the Assessing Officer be restored.

2. ITA No.1943/Ahd/2011 Asst. Year 2008-09 Revenue has raised following grounds in this appeal :-

1. The ld. CIT(A) XV, Ahmedabad has erred in law and on facts in directing the Assessing Officer to allow the ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 4 Asst. Years 2007-08, 2008-09 & 2009-10

assessee's claim for deduction of Rs.3,69,16,784/- u/s 80IB(10) of the Act.

2. The ld. CIT(A) XV, Ahmedabad has erred in holding that the assessee fulfills the conditions laid down for claiming deduction u/s 80IB(10) even when the land was in the name of Dhan Vihar Co-op. Housing Society Ltd., which is a separate legal entity in the eye of law and the assessee entered into the project by a development agreement with the society. The entire responsibility to execute the housing project and abide by the terms and conditions of its approval right from the inception of the project till its completion rests with the Society. Assessee was just a contractor And not a developer.

3. The ld. CIT(A) XV, Ahmedabad has erred in law and on facts in deleting the disallowance of Rs.27,44,214/- made by the Assessing Officer u/s 40(a)(ia) of the Act.

4. On the facts and in the circumstances of the case, the ld.

CIT(A) XV, Ahmedabad ought to have upheld the order of the Assessing Officer.

5. It is therefore, prayed that the order of the ld. CIT(A) XV, Ahmedabad may be set aside and that of the Assessing Officer be restored.

3. ITA No.2235/Ahd/2012 Asst. Year 2009-10 The following grounds have been raised in this appeal :-

1a) The ld. CIT(A) -XV, Ahmedabad has erred in law and on facts in directing the Assessing Officer to allow the Assessee's claim for deduction of Rs.2,47,27,448/- u/s 80IB(10) of the IT Act.

ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 5 Asst. Years 2007-08, 2008-09 & 2009-10

1b) The ld. CIT(A)-XV, Ahmedabad has decided the issue No.1 on the ground in holding that the Assessee fulfills the conditions laid down for claiming deduction u/s 80IB(10) even when the land was in the name of Dhan Vihar Co-op. Housing Society Ltd., which is a separate legal entitity in the eye of law and the Assessee entered into the project by a development agreement with the Society. The entire responsibility to execute the housing project and abive by the terms and conditions of its approval right from the inception of the project till its completion rests with the society. The local authority had granted permission for development to the society. Assessing was just a contractor of the land owners constructing residential units and not a developer.

2) On the facts and in the circumstances of the case, the ld.

CIT(A) XV, Ahmedabad ought to have upheld the order of the Assessing Officer.

3) It is therefore prayed that the order of the ld. CIT(A) XV, Ahmedabad may be set aside and that of the Assessing Officer be restored.

4. First we take up ITA No.1744/Ahd/2013 Asst. Year 2007-

08.. The Assessing Officer made disallowance of Rs.1,14,73237/- u/s 80IB(10). The assessee carried the matter in appeal before the first appellate authority.

4.1 On appeal the CIT(A) gathered the facts from the assessment order as well as written submission which are as under :-

ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 6 Asst. Years 2007-08, 2008-09 & 2009-10

(a) "Shri K. C Patel from J. M. Patel & Brothers, C.A., A.R. of the assessee attended from time to time and furnished the details/evidences as called for which are perused and placed on record. The case was discussed with A.R. from time to time. The assessee carries on the business of development and construction of residential flats/houses. During the year under consideration, the assessee has undertaken the construction work of a housing project known as Dhan Vihar Co. Op. Housing Society Ltd.

During the year under account, the assessee has shown total receipt of Rs. 2,47,50,000/-on which the assessee has declared net profit of Rs. 1,14,73,237/-which in terms of percentage works out 46.36%."

(b) (i) "During the year under assessment, the assessee has constructed a housing project and shown net profit at Rs. 1,14,75,237/- as having been derived from the housing project. The assessee has claimed a deduction of Rs 1,14,75,237/- at 100% of its total profit u/s 80IB(10) stating that it was entitled to a deduction u/s 80IB in respect of its profit derived froth such activity of construction of housing project."

(li) "During the assessment proceedings, the claim of the assessee for deduction was examined and the assessee was asked to substantiate its eligibility for the deduction with reference to the conditions to be satisfied under the section 80IB vide notice dated 22/09/2009. The assessee filed its reply along with copy of (i) approved plan (ii) the audit report in Form 10CCB (iii) Permission for development/Raja Chitti (iv) the BU permission issued by the Local Authority and (v) the Development Agreement entered by it with the Society for the construction of the housing project."

(iii) "The brief facts of the case are that land bearing survey number 609/3, 610/1 having an area admeasuring 4817 Sq. Mtr. was purchased by the Dhan Vihar Co. Op. Hosing Society Ltd. on 17/07/2006 for a consideration of Rs. 72,25,000/-. As per the application and plan .filed by the Society, the Local Authority accorded the permission for development and construction of the project to the Dhan Vihar Co. Op. Housing Society Ltd. on 28/03/2007."

(iv) "The assessee entered into a Development Agreement with the Dhan Vihar Co. Op. Housing Society Ltd. on 15/02/2006. As per the terms of the agreement, (i) the assessee was given free access of the land for construction of the housing units as per the plan, (ii) the assessee was allowed to join the prospective buyers as the members on behalf of the society, (iii) the assessee was allowed to collect the consideration for land as well as super-structure from the buyers on behalf of the society, (iv) the assessee was allowed to retain the consideration received for construction and transfer the land cost to the Society. In other words the Society was formed for group housing of the members and was supposed to construct and transfer the houses to the members. According to the Development ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 7 Asst. Years 2007-08, 2008-09 & 2009-10 Agreement as the society was not experienced in construction, the assessee was appointed as a contractor to construct the houses on behalf of the society as per the terms and the approved plan of the Society."

(v) "Significantly, verification of the land documents reveal that the assessee was not the owner of the said land, but the owners were the Dhan Vihar Co. Op. Housing Society Ltd. who were permitted to develop the land by way of constructing the housing project. The name of the assessee appears neither in the application nor on the permission given by the Local Authority for the housing project."

(vi) "On perusal of the documents filed by the assessee in support of the claim, it was observed that permission/Rajachitti issued by the local authority, shows that the permission for construction was issued not to the assessee but to the Society which had applied for the same. The permission/rajachitti categorically states that permission for construction was being granted, as per the approved plan enclosed with the application and the permission was subject to various rules and bye laws of Gujarat Town Planning and Urban Development Rifles, Ahmedabad Urban Development Authority, General Development Control Regulation etc."

(vii) "From the above facts it is clear that the assessee did not own the land and the approval for the project was also not received in the name of the assessee. The documents clearly state that the local authority permitted the owner of the land viz the Dhan Vihar co. Op. Housing Society Ltd. to develop the housing scheme. The assessee came in to the project by the 'Development Agreement' entered by it with the land owner. Accordingly, one of the fundamental conditions, laid down in the provisions of section 80IB(10), relating to the approval of the project was not complied with by the assessee as much as it had not taken the approval from Local Authorities for the development and construction of the said project. Hence, it appeared that the assessee is not eligible for deduction1 u/s 801B(10), as claimed by4t."

(c) In response to the show cause notice dt. 06/11/09 from A.O. the assessee gave the following reply.

"(3) As regard land ownership

I and my family members are land owners since long.

a) The copy of 7/12 utara enclosed here with. Which show our ownership.

b) In fact the assessee himself is a landowner and he himself has started project.

The following evidences also proved the facts, ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 8 Asst. Years 2007-08, 2008-09 & 2009-10

(i) The NA. copy of show the name of applicant Mr. Ambalal N. Patel. The N.A. orders are dated: 31/3/2006 submitted here with. At this point there were no society in existence.

(ii) The original plan dated: 10/4/2006 also submitted here with. Which is also clearly disclosed the owners as myself and my family members(co-owner) have signed the plan and not by the society a«there were no society as on that date.

(iii) In N.A. order the collector has clearly stated that the plan submitted before him should be submitted to ADDA for their approval. According i have submitted plan with AUDA and get it approved. . :.

The above evidences clearly state that:-

(1) I am a land owner since many years.

(2) I am a builder.

(3) The land sale consideration also outstanding and to be received by us as out of sale proceed fund available from project.

(4) The society has no fund at all.

c) The society "Dhan vihar co. op. housing society .Ltd" registered at my residence house address on Date:17/5/2006. But before registration of society I have entered M.O.U./ development Agreement with other co owner (family members) dt.. 15/2/06. Therefore before registration of society. I become developer to develop the scheme. The terms/conditions of said M.O.U./Agreement are as under: .,. . , ,

1) Land owner myself and my blood related family members party of the first par.

2) Proposed society (which are to be registered for specific purpose after completion of scheme).There no members as on that date. The formation of society is also by we as a developer and Therefore society has no any real members or society has no land /no fund. It is a part of my activities as developer.

3) Myself as a developer also:-

a) The land owner are myself and others three my blood related family members.

b) The scheme to be developed by me as developer to claim deduction under section 80IB(10) of the Act. And the proposed society is to be registered only for limited Purpose of maintenances for behalf of future members.

ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 9 Asst. Years 2007-08, 2008-09 & 2009-10

c) The proposed society has at present no land / no actual members/ no fund and all work on behalf of proposed society is to be handle only by land owner/ myself as developer. Therefore society has no authority.

d) The agriculture land is to converted as N.A. only by the landowner, i.e. myself as developer Even plan also to be approved in my name as developer.

e) The landowner shall get sale consideration only after sales of units to actual members from whom actual collection made by the me as developer, therefore during the construction period also the land consideration is unpaid Which I shall collect from members and not from the Society.

f) All Financial / N.A./Plan / Material /Labour etc arrangement have been made by me as a developer and as per conditions of M.O.U.

g) The society has no right / title in land / property. All liabilities which are composite in nature and to be discharged by me as a developer.

h) The developer (myself) is authorized to registered the society for limited purpose of maintenance after completion of scheme only.

i) All profit and losses are profit / losses of developer i. e. mine (Mayur Estate developer). The society has no any rights.

j) The developer (myself) is also authorized to solve all the matters during the completion point.

Therefore, above facts are very clear that I am sole developer of the scheme. No other entity has any right/title or interest in the scheme. Even my financial traction also Proved that I have carried out all work including booking/collection/payment through my Bank account Please verify the P&L A/c and Balance Sheet and other evidences for above facts. You are therefore requested to recognize me /my proprietorship Mayur Estate developer as developer under section 801B(10) of the Act and not to be consider merely as work contractor.

(4) As regard work contractor:

The definition of work contractor has very limited scence/scop. The work contractor have no any rights of ownership / booking / planning / advertisement / collection from members /allotment of flats/units/ to solve loan problems of members/to help the members for their requirement etc all work relating to project. In my case being a developer I am fully authorized to do all works and not work contract only. I am solely responsible for whole project including profit/loss of the project.

ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 10 Asst. Years 2007-08, 2008-09 & 2009-10 In view of said facts evidences I am only a developer of the project and my project qualify for deduction under section 80IB( 10) of the act. Therefore you are requested to considered the above all aspect and grant me the deduction of Rs.11490915/- u/s. 80IB(10)of the act.

(5) The MOU/ Development agreement have been executed before registration of society and before the sale deed of land. Therefore registration of society and then after sale deed are part of project work in advance.

. '

The society has not purchased land but developer /land lord himself has made future plan to complete the project easily. There were no work contract at all after formation of society. Ever thing is completed oh or before registration of society.

(6) As para -16 of recent judgment of I.T.A.T. Ahmedabad in case of M/s Shakti corporation No. (2009) 032 SOT 0438 (Ahmedabad) dated: 7/11/2008. Read together with the judgment of Honorable Supreme; Court in case of Fakirchand Gulati v/s Uppal Agency Pvt. Ltd. 3302/2005 vide order dated 7/8/2008."

(d) The AO at para 3.9 to 3.12 of the assessment order examined the bare provisions! of section 80IB(1) and 80IB(10) and emphasized that legislature intention of putting 'and' between 'developing and building' is to indicate that for eligibility u/s.80IB(10) of the Act, the housing projects should not only be built but also to be developed by the assessee. This is a special condition that eligible enterprise must be not only a builder but also a developer. At para 3.13 to 3.14 of the impugned order the AO examined some of the submission made by the assessee including reliance placed on Hon'ble ITAT decisions in the case of Radhe Developers and in the case of Shakti Corporation. The AO emphasized that these decisions were not accepted by the department and pending at that time before the Hon'ble Gujarat High Court for adjudication. The assessee's claim of being developer was therefore rejected by the AO. To support such claim; the AO relied on the case of Larger bench of the ITAT Mumbai in the case of 1 M/s. B.T. Patil & Sons Belgham construction Pvt. Ltd. in ITA Nos. 1408 & 1409/PN/2003.

The AO considered the facts about issue/grant of permission related to development, occupation, approval of plan etc. in the name of respective society in para 3.16 of the asstt. order and held that the assessee because of its expertise in construction had come forward to construct the housing project in accordance with to the approval received by society. At para 3.17 of the asstt. order, the AO considered the various terms and conditions of the development agreement and held that though this agreement called a Development Agreement, but it is in essence an agreement for construction. The AO thereafter relied on the Supreme Court judgment in the* case of K. Raheja Development Corporation vs. State of Karnataka (2005) 2 STT 178 and held that society remain the owner of the land as also the property constructed thereon. At para 3.19 of the asstt order, the AO considered the contention of the appellant that it employed and engaged architect, structural Engg., arranged finance as developer and held that such functions are not very much different from that of a ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 11 Asst.

Years 2007-08, 2008-09 & 2009-10 civil contractor who wins a contract to build a dam or canal and executes it as per the plan supplied by the Principal according to the terms of the tender document/agreement or a work order and there the so called development agreement is a contract for construction. The AO at para 3,20 of asstt.order observed that the creation of society and fund arrangement by the assessee is to save the registration fees payable to state government since the same is not chargeable from such society. This is further held as inconsistent st^nd to save stamp duty on one hand while income tax on other hand on account of different stand taken for ownership of land before State Govt. and income tax department respectively. At para 3.21 the AO considered the assessee's contention about employment of man, material and finance to take risk and profit and held that by use of the material, he will not become the owner of the whole and he cannot transfer the property. The AO relied on Supreme Court decision in the case of HAL Ltd. vs. State of Orissa (55 STC 327) and Tamilnadu vs. Anandam Vishwanathan (1989) 1 SCC 613. The entire discussion from para 3.9 of the impugned order to para 3.21 was summarized at para 3.22 of the impugned order.

On the basis of this the AO at para 3.23 of the impugned order held that the assessee is not eligible for deduction u/s.80IB (10) of the Act for the following reasons:

1. The Assessee is not both developer and builder as required by the provisions of section 80IB (10). Assessee is not a developer because the assessee ;did not conceptualize and own the project in as much as the assessee ;is not the owner of the land and the approval was not issued to it by the Local authority.

2. The Assessee entered into the project by a Development Agreement with the Garvaketu co. op. Hsg. Society Ltd. and Bilwa co. op. Hsg. Society Ltd. and:

construction was done as per the agreement and hence the assessee is merely a contractor for the purposes of construction of the project.

3. The assessee has not sold any unit to the purchaser but the Societies had executed the sale deeds as a seller. This also proves that the assessee was merely a contractor/ agent of the society.

4. As per the Amendment to section 80IB by the Finance Act 2009, a works contractor who executes the work awarded by any person is not eligible for the deduction u/s 80IB. Any person includes the Dhanvihar Co. Op. Hsg.

Society Ltd. Which is a legal entity.

5. Apart from the above, the assessee's contention that the land is owned by himself and his family members since long is found to be baseless. No doubt the assessee and his family members held the land in the past. However, it is a fact that they have sold the land for an amount of Rs. 72,25,000/- vide sale deed dated 17/07/2006 to the Dhan Vihar Co. Op. Housing Society Ltd. In ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 12 Asst. Years 2007-08, 2008-09 & 2009-10 view of the above, the assessee cannot claim the ownership of the land after they have sold the land someone else. As such, the assessee's submission in this respect is rejected.

The A.O. therefore, disallowed the claim and made addition of Rs. 1,17,89,230/-.

The Id. CIT(A) XV, Ahmedabad vide her order dt. 30/11/2010 in appeal no. CIT(A)XV/ITO 9(2)/180/09-10 against the asstt. order dt. 18/12/2009 at para 6 of the said order held that-

"It is seen that the objection of the AO for disallowance of 80IB(10) deduction is that the appellant is not the owner of the land. This objection of the AO has to be seen in the light of the tests laid down by Hon'ble ITAT Bench A Ahmedabad decision dated 7.11.2008 in the case of M/s.Shakti Corporation, Baroda in ITA No. l503/Ahd/2008 in AY 2005-06.

After going through rival submissions I find that the appellant practically purchased the j land as obvious from the terms of the Development Agreement itself.

Page 3 of the Development Agreement dated 15.2.2006 states as under:

"In this way by the activity of construction and selling activity of the buildings, the developer is bound to pay the land cost to the land owner which is the party of the first part. After paying the land cost to the owners the developer is entitled to get profit or loss. The total responsibility of the profit or loss will be of the party of the third part known as Mayur Estate Developer"

ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 13 Asst. Years 2007-08, 2008-09 & 2009-10

As the AO has not challenged that the appellant violated any of the conditions stipulated from clause (a) to clause(d) of section 80IB(10) and the appellant as per the terms and conditions of the Development Agreement has to pay the land cost and also to develop the project at his own cost and risk and enjoy the subsequent profit or suffer the loss, in my view it is eligible for deduction. The AO is directed to allow the deduction claimed u/s.80IB(10)."

As against Ld. C.I.T.(A) order, revenue prepared appeal before Hon'ble ITAT. and Hon'ble ITAT Ahmedabad 'A1 bench in ITA No. 23/Ahd/2011 for such A.Y. 07-08 vide order dt. 23/07/12 at para 7 held -

^After examining the order of the learned CIT(A) we are of the opinion that the learned CIT(A) has passed the order finding justification only on the issue of ownership of the land based on the development agreement and has unjustly allowed the claim of the assessee. The learned AO has stated various reasons for disallowing the claim u/s 80 IB of the Act as extracted herein above. For granting deduction u/s 80 IB (1) of the Act the Hon'ble Gujarat High Court in the case of Radhe Developers reported in 341ITR 403 (Guj.) has laid down the following guidelines to be adhered to in granting deduction u/s 80 IB (10) of the Act: :

"(a) The relevant terms of development agreement are to be examined so as to ascertain the terms on which the assessee was granted right of construction of a housing project.

(b) On the basis of the terms and conditions, it has to be ascertained whether it was a "work contract" or a "Development Contract".

(c) On the basis of the terms and conditions, it has to be examined that which of the party had taken full responsibility for execution of the said development project.

ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 14 Asst. Years 2007-08, 2008-09 & 2009-10

(d) Whether under the agreement the assessee had been given full authority to develop the land and to construct residential units. The AO has to examine the fact in respect of engagement of professionals, such as, architect for designing and architectural work.

(e) The AO has to examine the responsibility of enrolment of members and collection of charges required toie made from the buyers of the residential units.

(f) The AO has to examine about the "profit" or "loss" arising from the said project.

(g) Though the ownership of land has been held as not the only criteria for allowing the claim u/s. 80 IB(10) but the domain over the land and the control over the project has to be examined by the AO.

(h) Whether on transfer of domain the land owners have received any consideration and whether it was a fixed amount or depend upon the profits of the project. Likewise, the AO has to ascertain that whether the assessee was given a fixed percentage as remuneration for the said project in lieu of granting permission to construct the residential units or to earn profit as a project developer.

(i) The AO has to ascertain the position of the possession over the land during the construction period.

(j) For the purpose of construction the AO has to examine the financial arrangements.

(k) The AO has to examine the procedure for raising of funds either by private placement or by financial institutions. .; . .

(I) The risk element connected with the said housing project has also to be examined.

(m) The Assessing Officer has to examine the size of the plot on which the project is constructed.

(n) The Assessing Officer has to examine built-up area of sanctioned unit whether will in the prescribed limit."

We find that the lefrned CIT(A) has not looked into these issues as examined by the learned AO while arriving at his decision for granting deduction u/s 80 IB (10) of the Act. Therefore, in the interest of justice, we set aside the order of the learned CIT(A) and remit back the case to the file of ht e learned CIT(A) to pass appropriate order as per law and on merits after considering the guidelines rendered by the Hori'ble Gujarat High Court in the case of Radhe Developers as ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 15 Asst. Years 2007-08, 2008-09 & 2009-10 extracted herein above and after affording sufficient reasonable opportunity of being heard to the assessee. It is ordered accordingly."

4.2 In setting aside issue the CIT(A) allowed the claim of assessee and the same has been opposed before us on behalf of the Revenue. The DR submitted that CIT(A) erred in directing the Assessing Officer to allow the claim of deduction of Rs.1,14,75,237/- under section 80IB(10). The ld. DR also submitted that CIT(A) erred in law and on facts that the Memorandum of Understanding/Development Agreement were executed before the registration of the Dhanvihar Co-op. Housing Society Ltd. The assessee is only a contractor and so not entitled for deduction u/s 80IB(10). On the other hand the ld. AR supported the order of CIT(A).

4.3 The issue before us is with regard to disallowance of Rs.1,14,75,237/- u/s 80IB(10) in the year under consideration. The CIT(A) observed that Assessing Officer failed to consider and appreciate the detailed explanation given by the assessee during the course of assessment proceedings highlighting the facts that he fulfilled all the requisite conditions for eligibility of claim u/s 80IB(10) of the Act. The involvement of assessee's fund thereby risk undertaken by assessee for development of housing project were not disputed by the Assessing Officer. He simply raised two ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 16 Asst. Years 2007-08, 2008-09 & 2009-10

issues for disallowances i.e. the ownership of land and assessee was a work contractor. The Assessing Officer ignored assessee's submission based on facts as well as legal proposition that dominion control over land with all the risk of development was that of assessee and it is only for some technical purpose the society was in picture for obtaining permission for development and other signatory functions. The CIT(A) following the ratio of the decision of Hon'ble Gujarat High Court in the case of Radhe Developers & Ors. Observed that all details and explanations were verifiable from the details and submissions made by assessee before Assessing Officer. The analysis reflects that assessee fulfilled all the eligible conditions for claim of deduction u/s 80IB(10). There is no provisions of section 80IB(10) regarding the ownership of land and it is not stipulated in any sub-section that approval of housing project by the local authority and BU permission should be in the name of developer. It is only the profit derived from building and developing a housing project on minimum one acre of land with each unit below 1500 sq.ft. with other time limitation is entitled for deduction u/s 80IB(10) of the Act. All these conditions are to be seen on stand basis. The CIT(A) examined the facts in the light of the decision in the case of M/s Radhe Developers and found that assessee has satisfied all the requirements of section 80IB(10) of the Act. The CIT(A) observed ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 17 Asst. Years 2007-08, 2008-09 & 2009-10

that assessee has acquired all substantive development rights. Development agreements entered into by the assessee was over and above the agreement to sell to acquire the rights and domain over the project including land in question. The assessee is entitled to receive the sale consideration and shall accept all the payments from the buyers, the details of the same are placed on record which is not disputed on behalf of the Revenue. AUDA has granted permission to construct 124 residential units and 8 shops in 4817 sq.ft. of land and in the permission for development the name of Chairman/Secretary of Dhanvihar Commercial & Housing Co.Op. society Ltd. is mentioned with address 19, Bhagyodaya Raw Bunglows, RC Technical Road, i.e. address of assessee. Building Use certificate is issued in the name of Chairman/secretary, Dhanvihar Commercial & Housing Co.op. Soc. Ltd. c/o Mayur Estate Developer i.e. assessee's prop. Concern name. When permission for development and Building Use certificates are considered in the light of the development agreements, it would clarify that the property numbers are same as has been mentioned by AUDA and there is no objection from the side of the society. Therefore it was found that the building plans have been sanctioned in respect of the land developed by the assessee through the agreement to sell and the development agreements in question. The details on record supports the case of the assessee that the ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 18 Asst. Years 2007-08, 2008-09 & 2009-10

assessee has undertaken the entire development of the housing project for which the plans were approved and permission to use was obtained in respect of the same property in question. The assessee incurred all the expenditure for development of the housing project and received the entire sale consideration from the buyers. These facts prove that assessee made the payments of sale consideration of the property in question and the details of sale proceeds received from the buyers have been mentioned in the total sale proceeds in the books of accounts of the assessee. It establishes that assessee entered into development agreements and agreement to sell with the purchaser for consideration. All responsibilities for carrying out construction, permission and development of the project lie with the assessee. The real owner of the land i.e. the society was only to co-operate with the assessee in carrying out the development and to execute necessary documents whenever required by the assessee as a developer. The society was not left with any right, interest or title in the development which was carried out by the assessee. The motives of the society was not to develop, construct or carrying out any business as a builder or developer and practically nothing was left with him. For all intent and purposes the assessee had acquired domant rights over the project including land and the assessee could deal in the land in the manner in which the assessee thought fit. The terms and conditions ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 19 Asst. Years 2007-08, 2008-09 & 2009-10

entered into between the assessee and the society as per the development agreements provided all the dominant control and rights over the land to the assessee and the assessee developed and constructed the housing project at its own cost and would remain owner of the building without any interference from the society. The development agreements in question did not provide that the assessee would be working as a contractor or agent on behalf of the society. The assessee acquired the land in question and has developed the housing project at its own cost as per requirement of section 80IB(10) of the Act. The assessee has developed and constructed the housing project as per the development agreements by incurring total expenditure and received the sale consideration. The assessee satisfied the requirements of provisions of section 80(IB)(10). Moreover once plan is approved by AUDA on papers submitted by assessee and others, it would be deemed approval of construction of housing units in favour of the assessee, more so, when assessee entered into agreements for developing the whole of the property. In view of the above, CIT(A) was justified in granting deduction because assessee has acquired right of developing housing project, incurring total expenditure and taking all risks thereof. There is no infirmity in the order of CIT(A). So we are inclined to uphold the same.

ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 20 Asst. Years 2007-08, 2008-09 & 2009-10

5. In Assessment Years 2008-09 and 2009-10, in first issue the facts & circumstances being identical, so following same reasons we are not inclined to interfere with the orders of CIT(A) who has allowed the claim of assessee u/s 80IB(10) as claimed . We uphold the same.

6. As regards ground no.3 of ITA No.1943/Ahd/2011 for AY 2008-09 the Revenue pleaded that CIT(A) erred in deleting the disallowance of Rs.27,44,214/- made by the Assessing Officer u/s 40(a)(ia) of the Act. The Assessing Officer observed that TDS deducted on labour/transport charges totaling to Rs.27,44,214/- paid to 18 different parties in January 2008 and February, 2008 was deposited in government account not by 31.3.2008 (which the statute requires) but 4.4.2008. Thus the AO added the amount u/s 40(a)(ia) of the Act.

6.1 On appeal before first appellate authority, the assessee vide written submission dated 6.6.2011 stated that copies of all a/cs and TDS return/challans also were submitted. ITAT Ahmedabad in the case of Kanubhai Ramjibhai Makwana vs. ITO reported in 135 TTJ 364 (Ahd) has decided that TDS deposited on or before due date of filing of return is also allowable expenses. In fact ITAT observed as under :-

ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 21 Asst. Years 2007-08, 2008-09 & 2009-10 "13. In view of the above discussion following the case of Hon'ble apex court and Hon'ble High Courts cited above we are of the view that the provisions of section 40(a)(ia) as amended by the Finance Act 2010 w.e.f. 1.4.2010 which has newly been inserted by the Finance (No.2) Act 2004 with effect from 1st April, 2005 to section 40 of the Act is remedial in nature designed to eliminate unintended consequences which may cause undue hardhip to the taxpayers and which made the provision unworkable or unjust in a specific situation and is of clarificatory nature and therefore has to be treated as retrospective with effect from 1st April 2005 the date on which section 40(a)(ia) has been inserted by the Finance (No.2) Act, 2004. Accordingly this issue of the assessee's appeal is awaited."

Following the above decision of the Tribunal, CIT(A) has allowed the disallowance of Rs.27,44,214/-.

6.2 The DR supported the order of Assessing Officer whereas the ld. AR relied on the order of CIT(A).

6.3 After considering the rival submissions, we find that there is no infirmity order of CIT(A) who has allowed the disallowance by following the decision of the Tribunal in the case of Kanubhai Ramjibhai Makwana (supra) wherein it has been held that in case TDS has been deposited on or before due date of filing of return, the same is allowable. We uphold the same.

7. In the result, all the appeals of Revenue are dismissed.

Pronounced in the open Court on this the 30th day of June, 2015 Sd/- Sd/-

(Anil Chaturvedi) (Shailendra Kumar Yadav) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated :_30/6/2015 Mahata/- ITA Nos. 1744, 1943 & 2235 - Ambalal N. Patel 22 Asst. Years 2007-08, 2008-09 & 2009-10

Copy of the order forwarded to: 1. The Appellant 2. The Respondent 3. The CIT concerned 4. The CIT(A) concerned 5. The DR, ITAT, Ahmedabad 6. Guard File BY ORDER

Dy.Registrar,ITAT, Ahmedabad

1. Date of dictation: 30/6/2015

2. Date on which the typed draft is placed before the Dictating Member: 30.6.2015 other Member:

3. Date on which approved draft comes to the Sr. P. S./P.S.:

4. Date on which the fair order is placed before the Dictating Member for pronouncement: __________

5. Date on which the fair order comes back to the Sr. P.S./P.S.:

6. Date on which the file goes to the Bench Clerk: 2/7/2015

7. Date on which the file goes to the Head Clerk:

8. The date on which the file goes to the Assistant Registrar for signature on the order:

9. Date of Despatch of the Order: