2013 (4) TMI 786 - HC - Income Tax

Summary

Issues involved:
The issues involved in this case are:
1. Whether the Income Tax Tribunal was right in law in deleting the addition made on account of disallowance of deduction claimed under Section 80IB [10] of the Income Tax Act by the Assessing Officer?
2. Whether the assessee firm is entitled to claiming deduction under section 80IB (1) r/w. Section 80IB (1) and rule 18BBB as the assessee firm has not fulfilled the condition mentioned in the above-mentioned section?

Issue 1: Deduction under Section 80IB [10] of the Income Tax Act:
The short issue in this case pertains to the assessee's claim of deduction under Section 80IB [10] of the Income Tax Act, 1961. The Revenue's objection was that the assessee did not own the land on which the Housing Project was developed, hence the deduction was not allowable. The Court referred to a previous judgment and highlighted that the essence of sub-Section (10) of Section 80IB requires involvement in developing and building housing projects approved by the local authority. The provision aims to encourage providing housing units in areas with housing shortages. The Court noted the terms of the development agreements and sale agreements, emphasizing that the assessee had total and complete control over the land in question. The assessee took the full risk of executing the housing project, investing its own funds, and engaging various agencies. The Court concluded that the assessee was entitled to the deduction under Section 80IB [10] of the Act, and accordingly, the Tax Appeal was dismissed.

Issue 2: Entitlement for claiming deduction under Section 80IB (1):
The second issue raised was whether the assessee firm is entitled to claiming deduction under section 80IB (1) r/w. Section 80IB (1) and rule 18BBB as the assessee firm has not fulfilled the condition mentioned in the above-mentioned section. However, the judgment primarily focused on the first issue regarding the deduction under Section 80IB [10] and did not provide specific details or analysis related to the entitlement for claiming deduction under Section 80IB (1).

Therefore, the Court dismissed the Tax Appeal filed by the Revenue challenging the judgment of the Income Tax Appellate Tribunal regarding the deletion of the addition made on account of disallowance of deduction claimed under Section 80IB [10] of the Income Tax Act by the Assessing Officer.