Whether The Proviso To Section 80Ib Of The Act Requires Thatownership Of The Land Would Be A Condition Precedent For Developinghousing Project Has Been Consider v. Under

Digitallysigned byPURTIPURTIPRASADPRASADPARABPARABDate:2022.03.0811:23:22+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 470 OF 2017ALONGWITHINCOME TAX APPEAL NO. 945 OF 2017 Principle Commissioner of Income Tax – 32 V/s. Vishnu Enterprises ….Appellant …Respondent ---- Mr. Arvind Pinto for Appellant.Mr. M. Subramanian i/b Mr. Vishnu S. Hadade for Respondent. ---- CORAM : K.R. SHRIRAM &N. J. JAMADAR, JJ. DATED : 3[rd] MARCH, 2022 N. J. JAMADAR, JJ. P.C. : 1.Appellant is impugning the order dated 9[th] March, 2016 passed by the Income Tax Appellate Tribunal (ITAT) upholding the conclusionsarrived at by the Commissioner of Income Tax (Appeals). 2.The substantial question of law proposed in ITXA No.470 of2017, read as under : QUESTION OF LAW 1.Whether on the facts and in the circumstance of the caseand in law, the Hon’ble ITAT was justified in not taking intoconsideration a turning fact; namely that the land in questionhad been conveyed to the SRA and the firm was merelyconstructing on the dictates of the SRA as its contractor. 2.Whether on the facts and in the circumstances of the case,the Hon’ble Tribunal was correct in its proposition that theRespondent firm be considered a developer and not acontractor, in view of the undisputed fact of having conveyedthe land to the SRA. 3.Whether in law and on the facts of the instant case, wasthe Tribunal justified in merely upholding the orders of theCIT(A); without proper appreciation of the facts of the landhaving been transferred to the SRA; thereby reducing the firmto the status of a contractor for the former. 3. 3.If one considers these three questions in totality, the revenue’scase is quite clear, i.e., since assessee was not the owner of the land whendevelopment work took place, assessee is not entitled to the benefits ofSection 80IB(10) of the Income Tax Act, 1961 (the Act). 4.We have considered the order of the ITAT, CIT(A) and theAssessing Officer, copies whereof are annexed to the Appeal memo. 5.Based on the facts alleged before the CIT(A) and the ITAT, theITAT has come to a conclusion on facts agreeing with the view taken byCIT(A) that the agreement entered into between assessee and SRA shouldbe considered as a whole in order to ascertain the status of assessee. We arein agreement with this approach of the ITAT. Moreover, on examination ofthe agreement, copy whereof was also tendered to the court on the court’sdirection, a view has been taken that the assessee cannot be considered as amere contractor simply for the reasons that the land was conveyed to SRA,since assessee has taken up the entire responsibility to construct thetenements along with infrastructural facilities and the building soconstructed has been handed over to SRA. This is what emanates from theagreement which we have also considered with the assistance of thecounsel. 6.Whether the proviso to Section 80IB of the Act requires thatownership of the land would be a condition precedent for developinghousing project has been considered by the Hon’ble Gujarat High Court inCommissioner of Income Tax vs. Radhe Developers1. The Gujarat HighCourt has rejected the argument of Revenue that in order to receive benefitunder Section 80IB(10) of the Act requirement of ownership of the landmust be read into the statute. The relevant portion of the judgment reads as under : XXXXX 6.Whether the proviso to Section 80IB of the Act requires thatownership of the land would be a condition precedent for developinghousing project has been considered by the Hon’ble Gujarat High Court inCommissioner of Income Tax vs. Radhe Developers1. The Gujarat HighCourt has rejected the argument of Revenue that in order to receive benefitunder Section 80IB(10) of the Act requirement of ownership of the landmust be read into the statute. The relevant portion of the judgment reads as under : XXXXX 31. Neither the provisions of Section 80IB nor any otherprovisions contained in other related statutes were brought toour notice to demonstrate that ownership of the land wouldbe a condition precedent for developing the housing project.It was perhaps not even the case of the Revenue that underthe other laws governing construction in urban and semi-urban areas, there was any such restriction. It is, however,the thrust of the argument of the Revenue that in order toreceive benefit under Section 80IB(10) of the Act, suchrequirement must be read into the statute. We cannot acceptsuch a contention. Firstly, as already noted, there is nothingunder Section 80IB(10) of the Act requiring that ownership ofthe land must vest in the developer to be able to qualify forsuch deduction. Secondly, term “developer” has beenunderstood in common parlance as well as in legal sensecarrying a much wider connotation. The Tribunal itself in theimpugned order has traced different meanings of term“developer” explained in different dictionaries, which read asunder:- “a. The Webster's Encyclopedia unabridged of the EnglishLanguage gives following meaning of the term developer as:“1. One who or that which develops;Language gives following meaning of the term developer as:“1. One who or that which develops; 2. A person who invests in and develops the urban orsuburban potentialities of real estate.suburban potentialities of real estate. b. Oxford Advanced Learners Dictionary of Current EnglishFourth Indian Edition gives meaning of the term 'developer' aspersons or company that develops land. 1 [2012] 341 ITR 403 (Guj) c. Random House Dictionary of the English Language, thefollowing can be found.Develop:following can be found.Develop: a. To bring out the capabilities or possibilities of; bring to amore advanced or effective state.more advanced or effective state. b. To cause to grow or expand. Developer: a. The act or process of developing; progress. b. Synonym: Expansion, elaboration, growth, evolution,unfolding, maturing, maturation.unfolding, maturing, maturation. d. Webster Dictionary, the following definitions emerge: a. To realize the potential of; b. To aid in the growth of strength, develop the biceps, c. To bring into being: make active (develop a business) d. To convert (a tract of land) for specific purpose, as bybuilding extensively.building extensively. e. Law lexicon Dictionary: The following definitions could beseen:seen: Development a. To act, process or result of development or growing orcausing to grow; the state of being developed. b. Happening.” 32. Section 80IB(10) of the Act thus provides for deductionsto an undertaking engaged in the business of developing andconstructing housing projects under certain circumstancesnoted above. It does not provide that the land must be ownedby the assessee seeking such deductions. XXXX 7.It will also be apposite to reproduce paragraph no.7 of the order 2which reads as in Commissioner of Income Tax - 24 vs. Abode Builders2 under: 7. As regards the first issue regarding the ownership of theland, though it was raised before the ITAT, has not been raisedin this present appeal. Mr.Walve submits that the controversyhas been settled by the Gujarat High Court in the case of CITvs. Radhe Developers3 in favour of assessee. Therefore, weneed to consider only the other two issues for not allowingthe claim of deduction under Section 80IB(10) of the Act. 2 ITXA No.2020 of 2017 dated 16[th] February, 2022 3 341 ITR 403 (Guj) XXXX 7.It will also be apposite to reproduce paragraph no.7 of the order 2which reads as in Commissioner of Income Tax - 24 vs. Abode Builders2 under: 7. As regards the first issue regarding the ownership of theland, though it was raised before the ITAT, has not been raisedin this present appeal. Mr.Walve submits that the controversyhas been settled by the Gujarat High Court in the case of CITvs. Radhe Developers3 in favour of assessee. Therefore, weneed to consider only the other two issues for not allowingthe claim of deduction under Section 80IB(10) of the Act. 2 ITXA No.2020 of 2017 dated 16[th] February, 2022 3 341 ITR 403 (Guj) Therefore, in our view the questions as proposed do not raise any substantial question of law. 8.In Income Tax Appeal No.945 of 2017 following four substantial questions of law are proposed. QUESTION OF LAW 1.Whether on the facts and in the circumstances of the caseand in law, the Hon’ble Tribunal was justified in cancelling theorder of the CIT issued under section 263; failing to note thatthe CIT had cancelled the original assessment since there wasno verification or enquiry done in the original assessment. 2.Whether in law and on the facts of the instant case wouldthe lack of verification or enquiry permit the CIT to exercisepowers under section 263 of the Act. 3.Whether in law and on the facts of the instant case, theTribunal was in gross error in placing reliance on the order ofthe CIT(A) for 2007-08 to hold that the issue was debatable;the Tribunal ought to have appreciated that each assessmentyear is a separate entity and therefore was required toconsider the facts and circumstances that were before the A.O.and the CIT for 2006-07. 4.Whether in law and on the facts of the case, was theTribunal justified in holding that the Respondent Assessee waseligible for deduction under section 80(IB)10; notappreciating the Explanation to the said sub-section that thisdeduction is not available to a contractor. 9.If we consider Question No.4 then we will not have to go to consider Question No.1, 2 and 3 because Question No.4 is similar to the questions proposed in Income Tax Appeal No.470 of 2017, which we haveheld does not raise any substantial question of law. 10.In our view, the Tribunal has not committed any perversity orapplied incorrect principles to the given facts and when the facts andcircumstances are properly analysed and correct test is applied to decide theissue at hand, then, we do not think that question as pressed raises anysubstantial question of law. The appeals are devoid of merits and dismissed with no order as tocosts. (N. J. JAMADAR, J.) (K.R. SHRIRAM, J.)