COMMISSIONER OF INCOME TAX II vs. SHREEJI DEVELOPERS

TAXAP/1287/2014HC GujaratGJHC24022809201418 November 2014Author: HONOURABLE MR. JUSTICE KS JHAVERI,HONOURABLE MR. JUSTICE K.J.THAKER6 pages
AI SummaryDismissed

Facts

The assessee, Shreeji Developers, a firm engaged in housing construction, filed its return for AY 2007-08 declaring NIL income after claiming a deduction of Rs. 83,48,670/- under Section 80IB(10) of the Income Tax Act. The Assessing Officer (AO) disallowed this deduction and determined the total income at Rs. 83,48,670/-. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who allowed the appeal. The Revenue then appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the appeal. The Revenue has now filed this Tax Appeal before the High Court challenging the ITAT's order.

Held

The High Court held that the present Tax Appeal deserves to be dismissed. The Court referred to its own decision in Commissioner of Income-Tax v. Radhe Developers (supra) and Tax Appeal No. 643/2012, which dealt with similar issues. In the Radhe Developers case, the Court elaborated on the essence of Section 80IB(10), stating it requires an undertaking in developing and building housing projects approved by the local authority. The Court noted that the provisions do not require developers to own the land. Analyzing the development agreements, the Court found that the assessee had total and complete control over the land, undertook the entire task of development, construction, and sale, bore the entire risk element, invested its own funds, and was entitled to the surplus after paying the land owner a fixed price. Therefore, the conditions for claiming deduction under Section 80IB(10) were met. The appeal was dismissed.

Key Issues

1. Whether the Tribunal and CIT(A) erred in allowing the deduction under Section 80IB(10) of the Income Tax Act, 1961, when the assessee did not own the land on which the housing project was developed? (Question of law) Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The view taken by the Tribunal and CIT(A) is contrary to the provisions of law. The Revenue relies on the High Court's decision in Commissioner of Income-Tax v. Radhe Developers [(2012) 341 ITR 403 (Guj)] and another Tax Appeal No. 643/2012.

Sections Cited

Section 80IB(10), Section 143(3)

AI-generated summary — verify with the full judgment below

O/TAXAP/1287/2014 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1287 of 2014

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI

and HONOURABLE MR.JUSTICE K.J.THAKER

================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX II....Appellant(s) Versus SHREEJI DEVELOPERS....Opponent(s) ================================================================ Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER

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