PRINCIPAL COMMISSIONER OF INCOME TAX, VADODARA-3 vs. SAMRUDHHI DEVELOPERS

By this appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), the appellant revenue has challenged the order dated 19.3.2018 passed by the Income Tax Appellate Tribunal, Surat Bench, Surat (hereinafter referred to as “the Tribunal”) in ITA No.1558/Ahd/2014/SRT by proposing the following questions stated to be substantial questions of law. “(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 deduction under section 80IB(10) of the Act as a developer of the Housing Project even though the assessee had merely acted as contractor making him ineligible for deduction under section 80IB(10) of the Act? (b) Whether on the facts and in circumstances of the case, C/TAXAP/1297/2018 ORDER the learned ITAT has erred in law and on facts in deleting the addition in respect of disallowance of deduction under section 80IB(10) of the Act by ignoring the fact that the assessee did not fulfill the condition regarding minimum size of the plot of land being one acre of land?”

The assessment year is 2009-10. In this case, the return of income for the year under consideration came to be filed on 19.9.2009 declaring total income at Rs. Nil. Assessment came to be carried out under section 143(3) of the Act and by an order dated 20.12.2011, the income of the respondent assessee was determined at Rs.1,52,37,150/- by disallowing the claim of deduction under section 80IB(10) of the Act. The assessee carried the matter in appeal before the Commissioner (Appeals), who allowed the ground of appeal and held that the assessee is a developer and not a mere contractor and is eligible for deduction under section 80IB(10) of the Income Tax Act and directed the Assessing officer to grant deduction under section 80IB(10) of the Act to the assessee. The revenue challenged the order passed by the Commissioner (Appeals) before the Tribunal. By the impugned order, the Tribunal has upheld the order passed by the Commissioner (Appeals) and dismissed the appeal filed by the revenue.

Mr. Varun Patel, learned senior standing counsel for the appellant, assailed the impugned order on the grounds recorded by the Assessing Officer in the assessment order. It was submitted that in the facts of the present case, the assessee having carved out plots from the land in question and having sold the same, did not fulfill the condition regarding C/TAXAP/1297/2018 ORDER minimum size of the plot being one acre of land, and hence, was not entitled to deduction under section 80IB(10) of the Act. It was submitted that, therefore, the sale proceeds were work contract receipts and a risk was taken by the assessee in respect of the project. Thus, it cannot be said that the project as a whole has been developed and built by the assessee within the meaning of section 80IB(10) of the Act. It was submitted that, therefore, the appeal requires consideration on the questions as proposed or as may be formulated by this court.

This court has considered the submissions advanced by the learned senior standing counsel for the appellant and has perused the orders passed by the authorities below.

On a perusal of the order passed by the Commissioner (Appeals), it is evident that he, after appreciating the material on record has found that the issue regarding the ownership of the land has been settled in favour of the assessee in assessment year 2005-06 passed by this court in Tax Appeal No.1225 of 2009 in the case of Vedant Enterprises. The Commissioner (Appeals) has referred to various other decisions of this court on the issue of ownership of the land for claiming deduction under section 80IB(10) of the Act and following the same has held that the ownership of the land for development of a housing project is not a pre-condition for claiming deduction under section 80IB(10) of the Act.

On the issue as to whether the assessee was a contractor or a developer, in view of the fact that it had sold the land separately and undertaken the construction work as per separate agreement, the Commissioner (Appeals) has followed C/TAXAP/1297/2018 ORDER the Tribunal's earlier decision in the case of M/s. Satsang Developers v. ACIT. Thus, the Commissioner (Appeals) has merely applied the decisions of this court as well as of the Tribunal to the facts of the present case for holding that the assessee is a developer and not a mere contractor who is eligible for deduction under section 80IB(10) of the Act.

The Tribunal, after re-appreciating the material on record, has concurred with the findings recorded by the Commissioner (Appeals) and has found that in view of the decision of the jurisdictional High Court, the contentions raised by the Assessing Officer are not acceptable. Thus, both the Commissioner (Appeals) as well as the Tribunal have merely applied the decisions of the jurisdictional High Court to the facts of the present case. On behalf of the appellant nothing has been pointed out to show that the Tribunal has placed reliance on any irrelevant material or that any relevant material has been ignored. In the absence of any perversity being pointed out in the findings recorded by the Tribunal, no case is made out so as to warrant interference.

In the light of the above discussion, it is not possible to say that the impugned order passed by the Tribunal gives rise to any question of law, much less, a substantial question of law warranting interference. The appeal being devoid of merits, therefore, fails and is, accordingly, dismissed. (HARSHA DEVANI, J) (A. P. THAKER, J) Z.G. SHAIKH