2013 (2) TMI 719 - AT - Income Tax

Summary

Issues Involved:
1. Whether the Ld. CIT(A) was justified in holding that the area of the plot of land on which the eligible housing project is undertaken by the assessee complies with the condition laid down in section 80IB(10)(c) of the Act.
2. Whether the assessee is entitled to deduction u/s 80IB(10) despite the Assessing Officer's objections regarding ownership and demarcation of the land.

Summary:

Issue 1: Compliance with Section 80IB(10)(c)
The revenue challenged the order of the Ld. CIT(A)-II, Pune, which allowed the assessee's appeal for the assessment year 2007-08. The primary issue was whether the area of the plot of land on which the housing project "Bhujbal Township" was undertaken complied with the condition laid down in section 80IB(10)(c) of the Act. The assessee, a construction firm, claimed a deduction u/s 80IB(10) amounting to Rs. 2,05,56,550/-. The Assessing Officer (A.O.) disallowed this deduction, arguing that the area of the plot was not properly demarcated to identify that it was more than 1 acre. The Ld. CIT(A) accepted the assessee's plea that the area of the plot on which the residential project was constructed was more than one acre and that the demarcation was not a precondition for the deduction.

Issue 2: Entitlement to Deduction u/s 80IB(10)
The A.O. contended that the assessee was not the owner of the land and merely had development rights, thus not entitled to the deduction u/s 80IB(10). The Ld. CIT(A) found that the assessee had exclusive ownership rights and complete dominion over the plot of 4902 sq.mtrs., which was more than 1 acre. The Ld. CIT(A) also noted that the definition of "plot" as per the Maharashtra Regional and Town Planning Act was irrelevant in the context of section 80IB(10) of the Income Tax Act. The Ld. CIT(A) relied on the decisions of the Ahmedabad Tribunal in the cases of Radhe Developers and Shakti Corporation, which held that acquisition of development rights through a development agreement was sufficient for claiming the deduction.

The Tribunal upheld the Ld. CIT(A)'s order, confirming that the project was situated on a piece of land admeasuring 4902 sq.mtrs. and that the assessee had complete dominion over this land. The Tribunal dismissed the revenue's appeal, affirming that the assessee was entitled to the deduction u/s 80IB(10) based on the percentage completion method, subject to the condition that if the project was not completed within the stipulated period, the deduction would be withdrawn.

Conclusion:
The Tribunal confirmed the Ld. CIT(A)'s order, allowing the deduction u/s 80IB(10) for the assessee's project, and dismissed the revenue's appeal.