2011 (4) TMI 642 - AT - Income Tax

Deduction u/s 80-IB - It is clear that only to the developer who develops the project in its entirety as per the approved plan can be given benefit of deduction u/s80-IB of the Act in respect of profits derived from such project - Find that the conditional approval has been granted by the assessee by the competent authority but the assessee has not filed any completion certificate of the project in question within the stipulated period of four years - Even the sanction/approval is subject to fulfilment of certain conditions mentioned in the certificate - However, the learned Commissioner of Income-tax (Appeals) has not given any finding with regard to status of the assessee whether the developer or merely a contractor - Therefore, set aside the order of the learned Commissioner of Income-tax (Appeals) on the issue of allowability of deduction u/s 80-IB of the Act and the matter is restored to the file of the Assessing Officer for deciding afresh after asking the assessee to produce completion certificate of the project which should be prior to 31-3-2008 by the local authority - Hence, the appeal of the revenue is allowed for statistical purposes.

Summary

Issues:
Claim under section 80-IB of the Act - Ownership of land - Deduction eligibility - Developer vs. contractor status - Completion certificate requirement.

Analysis:
The appeal by the revenue challenged the deletion of an addition on account of rejection of claim under section 80-IB of the Act. The main contention was that the assessee, not owning the land, should not be eligible for the deduction claimed for profits from housing projects. The Tribunal heard arguments from both sides, with the revenue citing a previous decision and highlighting discrepancies in approvals and ownership. The assessee argued that ownership is not a prerequisite for claiming the deduction and defended the impugned order.

The Tribunal examined the facts where the assessee entered a development agreement with a society for a housing project on land not owned by the assessee. The Assessing Officer denied the claim under section 80-IB due to lack of ownership and non-compliance with conditions. The Commissioner of Income-tax (Appeals) allowed the claim, emphasizing that the appellant, despite not owning the land, should not be denied the deduction under section 80-IB. However, the Tribunal found that the project completion condition and the developer status were crucial for claiming the deduction, which the Commissioner did not address. The Tribunal directed the matter back to the Assessing Officer for fresh examination, requiring the assessee to provide a completion certificate and details of work undertaken to determine if the assessee functioned as a developer or contractor.

In conclusion, the Tribunal allowed the revenue's appeal for statistical purposes only, highlighting the importance of fulfilling conditions under section 80-IB for claiming deductions related to housing projects. The judgment emphasized the significance of project completion, developer status, and compliance with legal provisions for eligibility under the Act.