Prasad And Company, Tiruppur vs Assessee

अपीलाथ क ओर से / Appellant by : T. Banusekar, C.A. यथ क ओर से / Respondent by : Shri. N. Madhavan, IRS, JCIT.

सन ु वाई क तार ख/Date of hearing : 17.06.2015. घोषणा क तार ख /Date of Pronouncement : 19.06.2015

आदे श / O R D E R

PER CHANDRA POOJARI, ACCOUNTANT MEMBER

This appeal by assessee is directed against the order of the

Commissioner of Income Tax (Appeals)-II, Coimbatore, dated

18.02.2014 for the assessment year 2009-2010.

:- 2 -: I.T.A.No.1353/Mds/2014

2. The only grievance of the assessee in this appeal is with regard

to non grant of deduction u/s.80IB(10) of the Income Tax Act.

3. The brief facts of the case are that the assessee claimed

deduction u/s.80IB(10) of the Act on the profit earned at

D1,15,25,539/- and the claim of the assessee was rejected by the

Assessing Officer on the reason that the assessee is a contractor and

not a developer after examining the agreement entered by the

assessee with the purchaser in view of the Explanation inserted w.r.e.f.

01.04.2001 by the Finance Act 2009. Aggrieved, the assessee

preferred an appeal before the Commissioner of Income Tax

(Appeals).

4. The Commissioner of Income Tax (Appeals) confirmed the

order of the Assessing Officer. Against this, the assessee is in appeal

before us.

5. We have heard both the parties and perused the material on

record. The ld. Authorised Representative for assessee submitted that

the assessee is a developer who has undertaken construction of flats

with various owners though assessee is not a owner of the land. The

ld. Authorised Representative for assessee further submitted that the :- 3 -: I.T.A.No.1353/Mds/2014

assessee is entitled for deduction u/s.80IB(10) of the Act in view of the

following decisions:-

(i) CIT vs. Radhe Developers (2012) 341 ITR 403 (Guj).

(ii) CIT vs. Sanghvi and Doshi Enterprise (2013) 214 Taxman 463 (Mad).

(iii) CIT vs. Mahalakshmi Housing 2012-TIOL -951-HC- MAD -IT.

(iv) CIT vs. Ceebros Property Development (P) Ltd. (2012) 83 CCH 98 (Madras HC)

(v) CIT vs. Moon Star Developers 2014 (4) TMI 1042-(Guj H.C)

6. On the other hand, the ld. Departmental Representative

relied on the order of the lower authorities and submitted that in the

agreement, the assessee was called as ''contractor'' and it cannot be

considered as ''developer'' and assessee has not taken any risk or

made any investment in the project and the cost of construction was

incurred by respective flat owners and as such deduction u/s.80IB(10)

cannot be granted.

7. We have heard both the parties and perused the material on

record. The contention of the assessee's counsel is that the assessee

though is not owner of the land, it has developed the housing

project, providing the necessary infrastructure, providing housing

loans for the buyers, it has involved from the commencement of the

project to the completion of the project, and in view of the order of

the co-ordinate bench in the case of Sanghvi & Doshi Enterprise vs. :- 4 -: I.T.A.No.1353/Mds/2014

ITO (2011) 131 ITD 151 (Chen), the assessee is entitled for

deduction u/s.80IB(10) of the Act. Admittedly, as held by the co-

ordinate bench in the case of Sanghvi & Doshi Enterprise confirmed

by Madras High Court, the assessee need not be a owner of the land

to grant deduction u/s.80IB (10), if the assessee undertakes all the

risk involved from the commencement of the project to the

completion of the project. In other words, if the assessee undertook

development of the project in terms of section 80IB(10) of the Act,

the assessee is entitled for deduction u/s.80IB(10) of the Act. In our

view, to give a finding whether the assessee is actually a developer

or contractor, one has to see the agreement the assessee entered

with the prospective buyer. Though there is an elaborate discussion

in the assessment order, the contents of all the agreements which

the assessee entered with the prospective buyer were not discussed.

In our opinion, it is appropriate to go through the agreements

entered with the prospective buyers alongwith financial statements to

see the details of investment made by assessee and decide the issue

in the light of the judgment of Madras High Court in the case of

Sanghvi & Doshi Enterprise [2013] 29 taxmann.com 386 (Madras).

Accordingly, we remit the entire issue to the file of Assessing Officer

with direction to examine whether the assessee made investment by :- 5 -: I.T.A.No.1353/Mds/2014

itself, executed development work and carried out civil works,

deployment of technical personal, plant and machinery, technical

knowhow, expertise and financial resources before handing over the

completed project to the owner of the flats. If it is so, then the

assessee has to be treated as developer rather than contractor. In

other words, the assessee would not be denied deduction

u/s.80IB(10) if the contract involves design, development, financial

involvement and technical knowhow from assessee's side itself.

8. Accordingly, we remit the entire issue to the file of the

Assessing Officer for fresh consideration.

9. In the result, the appeal of the assessee in ITA

No.1353/Mds/2014 is partly allowed for statistical purposes.

Order pronounced on Friday, the 19th day of June, 2015, at Chennai.

Sd/- Sd/- (च ला नागे "साद ) (चं पज ू ार ) (CHALLA NAGENDRA PRASAD) (CHANDRA POOJARI) या#यक सद य/ JUDICIAL MEMBER लेखा सद य/ ACCOUNTANT MEMBER चे"नई/Chennai. #दनांक/Dated:19.06.2015. KV

आदे श क त&ल'प अ(े'षत/Copy to: 1. अपीलाथ /Appellant 2. यथ / Respondent 3. आयकर आय* ु त (अपील)/CIT(A) 4. आयकर आय* ु त/CIT 5. 'वभागीय त न-ध/DR 6. गाड फाईल/GF.

:- 6 -: I.T.A.No.1353/Mds/2014