COMMISSIONER OF INCOME TAX Vs. KAMLESHKUMAR GANDALAL SHAH

JUDGEMENT

(1.) These appeals arise in similar common background. We may treat Tax Appeal No. 577 of 2014 as the lead matter. Revenue is in appeal against the judgement of the Income Tax Appellate Tribunal dated 08.11.2013. Tax Appeals were admitted for consideration of following substantial questions of law:

(2.) With some difficulty, we have been able to gather facts from record. Respondent-assessee is an HUF and was engaged in the development of housing projects. For the assessment year 2006-07, the assessee had filed return of income, on 28.12.2006 showing total of income of Rs. 7,870/- after claiming deduction of Rs. 70,11,618/- under section 80IB(10) of the Income Tax Act. The Assessing Officer in his order of assessment dated 29.12.2008 rejected the claim on the ground that the assessee was not the owner of the land. In his opinion therefore, the assesee failed the test of being a developer. In the opinion of the Assessing Officer, the assessee was merely an agent of the land and not a developer of land.

(3.) The assessee carried the matter in appeal. CIT(Appeals) noted that there were several conditions required to be fulfilled for claiming deduction under section 80IB(10) of the Act. One of them being that the project must be developed on the size of plot of land which has a minimum area of 1 acre. He called for the report of the DVO on the construction activity carried out by the assessee. After sharing such report to the assessee, he noted that in the report the DVO had noted that the assessee had constructed a total of 31 residential units, total admeasuring 4037.76 sq.mtrs. The prevailing FSI was 1.8. The DVO had therefore, divided the built-up area of 4037.76/1.8 to come to a conclusion that effectively the assessee had developed only 2243.2 sq.mtrs of land and had thus not developed a minimum plot area of 1 acre. According to the DVO, the assessee had left open terraces where further construction could be added later while selling the residential units.