Pradeep Parikh, Vice-President. - In all these are five appeals by three different assessees. All the appeals are against five different orders of the ld. CIT(A), all dated 29-1-2010. In the case of first two assessees they are for assessment years 2005-06 and 2006-07. In the case of third assessee, it is for assessment year 2006-07. Since common issues are involved in all the five appeals, they are being disposed of together by this combined order for the sake of convenience. The appeals of M/s. Sanghvi and Doshi Enterprise are taken up first for consideration.

2. The main ground in these two appeals is against the decision of the authorities below that the assessee is not a builder and developer but merely a building contractor and hence, is not eligible for deduction under section 80-IB(10) of the Income-tax Act, 1961 (the Act). The remaining grounds are against the decision that even otherwise, the assessee is not eligible for the said deduction as it has not fulfilled all the conditions required to claim such deduction.

3. The assessee firm is engaged in the business of construction. In assessment year 2005-06, the assessee computed a profit of Rs. 2,02,65,109 following the percentage completion method and the entire amount was claimed as deduction under section 80-IB(10) of the Act. In assessment year 2006-07, the assessee computed a profit of Rs. 2,96,02,224 on the same basis as in the earlier year and claimed deduction of Rs. 2,93,00,835 under section 80-IB(10) of the Act. In both the years, the profit was derived from a housing project named as "Vimalachal" at No. 1088, PH Road, Vepery, Chennai. The said project was constructed on a land owned by Hotel Mullai Pvt. Ltd. (HMPL).

4. The Assessing Officer considered the agreement dated 28-4-2003 entered into between HMPL and the assessee. He observed that HMPL as the owner of the land decided to develop the project for which the assessee was nominated as its builder for construction. The other observations of the Assessing Officer can be summarised as follows:

(a)The permissive possession of the land given to the assessee did not amount to delivery of possession as a part performance of the contract under section 53A of the Transfer of Property Act (TP Act) or under section 2(47) of the Income-tax Act.

(b)All the necessary permissions required to be obtained from Chennai Metropolitan Development Authority (CMDA), Corporation of Chennai (Corporation for short), Airport Authority of India (AAI) etc. were obtained by HMPL and not the assessee.

(c)There was no outright purchase of land on payment by the assessee from HMPL.

(d)The order of the DCTO described the assessee's nature of business as works contract.

(e)The assessee had sub-contracted the civil work of the project to GK Shetty Builders Pvt. Ltd. (GKSB) and that the assessee's status is similar to that of GKSB and it cannot be better.

The Assessing Officer was of the view that development includes many aspects and construction is only one of it. Based on the above facts and the provisions of section 80-IB(10), the Assessing Officer concluded that the assessee has assisted the owner, i.e., HMPL in construction only and all other developmental aspects have been done by HMPL. Accordingly, it was held that the assessee is not eligible for deduction under section 80-IB of the Act.

5. Besides the above, the Assessing Officer noticed that certain other conditions in order to claim the deduction were violated. They are as follows:

(a)The built-up area of certain flats exceeded the statutory limit of 1500 sq.ft.

(b)In some cases, two flats were combined to make a single dwelling unit with a single entrance and hence, the built-up area of the combined flats worked out to be more than 1500 sq.ft.

(c)In one case, the purchaser of the flat had an exclusive right over the terrace and if the built-up area of the terrace was included in the built-up area of the flat, the measurement would exceed 1500 sq.ft.

(d)According to the Assessing Offic