2011 (5) TMI 979 - AT - Income Tax

Summary

Issues Involved:
1. Deduction under Section 80 IB (10) of the IT Act.
2. Ownership of the land and eligibility for deduction.
3. Approval of the housing project by local authorities.
4. Completion of the housing project within the specified time frame.
5. Size of the plot and built-up area.
6. Dominant control and risk in the development of the project.

Issue-wise Detailed Analysis:

1. Deduction under Section 80 IB (10) of the IT Act:
The primary issue in the appeal was the deduction claimed by the assessee under Section 80 IB (10) of the IT Act, which was disallowed by the Assessing Officer (AO) on multiple grounds. The learned CIT(A) allowed the deduction, which the revenue challenged.

2. Ownership of the Land and Eligibility for Deduction:
The AO disallowed the deduction claiming the assessee was not the owner of the land, as the land was owned by the Cooperative Housing Society. The CIT(A) noted that the assessee firm had dominant control over the land by paying a premium to the old members of the society and incurred the cost of the land for all practical purposes. The Tribunal upheld this view, referencing earlier decisions in similar cases (Radhe Developers, Shakti Corporation), stating that ownership of the land is not a prerequisite for claiming the deduction.

3. Approval of the Housing Project by Local Authorities:
The AO argued that the housing project approval and BU permission were issued to the society, not the assessee. However, the CIT(A) found that the assessee firm had obtained the development permission and incurred costs for plan approval from AMC. The Tribunal agreed, emphasizing that the approval in the name of the society does not negate the assessee's eligibility for deduction if it had dominant control and bore the development risks.

4. Completion of the Housing Project within the Specified Time Frame:
The AO denied the deduction on the grounds that the BU permission was obtained after the deadline of 31-03-2008. The CIT(A) accepted the assessee's explanation that the project was completed in July 2006, and the delay in BU permission was due to technical issues with the local authority. The Tribunal upheld this interpretation, noting that the building was in use before the specified date, and procedural delays in obtaining the BU certificate should not bar the deduction.

5. Size of the Plot and Built-up Area:
The AO did not dispute the minimum plot size condition. The CIT(A) confirmed that the total land area was 10725 Sq. Mtrs., more than the required 1 Acre. The DVO's report, which suggested agreements with individual plot owners violated conditions, was dismissed by the CIT(A) as the total area complied with the requirements. The Tribunal agreed with this assessment.

6. Dominant Control and Risk in the Development of the Project:
The CIT(A) and the Tribunal found that the assessee had dominant control over the land, developed the project at its own risk, and incurred all related expenses. This was supported by the development agreement, which showed the assessee bore the financial and operational risks associated with the project. The Tribunal reiterated that the assessee satisfied the conditions of Section 80 IB (10), referencing the ITAT Ahmedabad Bench's decisions in similar cases.

Conclusion:
The Tribunal dismissed the departmental appeal, affirming the CIT(A)'s decision to allow the deduction under Section 80 IB (10) of the IT Act. The Tribunal found that the assessee met all the necessary conditions, including project completion within the specified timeframe, dominant control over the land, and compliance with plot size and built-up area requirements. The procedural delay in obtaining the BU certificate was not considered a valid reason to deny the deduction.