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2012 (12) TMI 84 - HC - Income TaxDeduction u/s 80IB - Ownership vs Builder - held that - Fact that Assessee was not the owner would not disentitle assessee from claiming relief u/s 80IB(10) of the Income Tax Act. As decided in Commissioner of Income-Tax V. Radhe Developers 2011 (12) TMI 248 - GUJARAT HIGH COURT , Gujarat High Court considered the question on ownership as a condition for grant of deduction under Section 80IB(10) in depth and accepted the case of an assessee similarly placed. It held that the provisions nowhere require that developers who are the owner of the land alone would be entitled for grant of deduction under Section 80IB(10). Therefore, assessees were entitled to the benefit u/s 80IB(10) even where the title of the lands had not passed on to the assessees and in some cases, the development permissions may also have been obtained in the name of the original land owners Decided against the Revenue. Whether Tribunal was right in holding that the provisions of Sec 80IB(10) provide for partial deduction to housing project with respect to residential flats with built up area of less than 1500 sq.ft. where the same project contains flats with built up area exceeding 1500 sq.ft - held that - Assessee was not entitled to relief in respect of those flats, which exceeded 1500 sq.ft. it is evident that what the assessee had undertaken is not a mere construction, but developing and constructing of a project, which qualifies for deduction u/s 80IB of the Income Tax Act. Deduction contemplated therein is oriented towards the project and not with reference to an assessee. It is no doubt true that the project has to be done by the assessee, but then, when the deduction is specific enough as regards the particular activity, administrative process, is purely at the hands of the Statutory Authority concerned, over which, the assessee could not have any control, the Explanation cannot, in any manner, have a negative effect on a factual aspect of the matter, namely, completion of the construction. Thus, in a case like this, where, the local authority, being the Corporation, had already certified about the completion of the project as per the approved plan, the fact that one of the Authorities, namely, Chennai Metropolitan Development Authority had issued a letter only on 13.6.2008, per se, cannot negative the assessee s claim for deduction. In the light of the above-said facts, Revenue s appeal is rejected. Though the assessee had complied with the extent of built-up area as per clause (c) and the assessee is entitled to have the benefit of deduction under Section 80IB of the Income Tax Act, since the Tribunal had remanded the portion of the built-up area for verification before the Assessing Officer and a factual enquiry has to be made thereon as to whether the built-up area is in fact 1500 sq.ft. or more than that In the circumstances, we confirm the order of the Tribunal on the remand portion. when the local authority, being part of Chennai Metropolitan Development Authority and also the approving authority, thus having certified about the completion, we do not find any justifiable ground to invoke Explanation (2) to sub-section (10) of Section 80IB of the Income Tax Act for the purpose of negativing the claim. In any event, going by the fact that the Explanation cannot have a control on the substantive provision, as a matter of construction, we agree with the assessee s contention and we have no hesitation in confirming the order of the Tribunal.
Issues Involved:
1. Eligibility of deduction under Section 80IB(10) of the Income Tax Act. 2. Compliance with the condition of submission of completion certificate from the local authority. 3. Entitlement to deduction for housing projects with residential flats exceeding the specified built-up area. 4. Proportional deduction for housing projects containing flats with built-up areas exceeding the specified limit. 5. Inclusion of open terrace area in the built-up area for the purpose of Section 80IB(10). Detailed Analysis: 1. Eligibility of Deduction under Section 80IB(10): The Tribunal held that the ownership of the land is not a criterion for claiming deduction under Section 80IB(10). The assessee, engaged in the business of developing and constructing housing projects, had entered into an agreement with the owner of the property. The Tribunal emphasized that the risk involved in the project was borne by the assessee, who was responsible for the construction and sale of the flats. The Tribunal concluded that the assessee qualifies as a developer and is eligible for the deduction under Section 80IB(10). 2. Compliance with the Condition of Submission of Completion Certificate: The Tribunal found that the assessee had completed the construction by 05.03.2006, and the local authority, Chennai Corporation, had issued a completion certificate on 28.12.2007. The Tribunal held that the completion certificate issued by the Chennai Metropolitan Development Authority (CMDA) on 13.06.2008 does not negate the fact that the project was completed before 31.03.2008. The Tribunal concluded that the assessee complied with the condition of submission of the completion certificate within the stipulated time. 3. Entitlement to Deduction for Housing Projects with Residential Flats Exceeding the Specified Built-up Area: The Tribunal remanded the matter to the Assessing Officer to verify whether any flats exceeded the built-up area limit of 1500 sq.ft. The Tribunal held that the mere fact that some flats exceeded the specified built-up area does not disqualify the entire project from claiming deduction. The Tribunal emphasized that the assessee should be entitled to deduction for the flats that comply with the built-up area limit. 4. Proportional Deduction for Housing Projects Containing Flats with Built-up Areas Exceeding the Specified Limit: The Tribunal, following the decision in CIT v. Bengal Ambuja Housing Development Ltd., held that the assessee is entitled to a proportional deduction for the flats that comply with the built-up area limit. The Tribunal rejected the Revenue's argument that exceeding the built-up area limit for any flat disqualifies the entire project from claiming deduction. 5. Inclusion of Open Terrace Area in the Built-up Area: The Tribunal held that the open terrace area should not be included in the built-up area for the purpose of Section 80IB(10). The Tribunal emphasized that the open terrace area is not part of the dwelling unit and should not be considered in determining the built-up area limit. The Tribunal's decision was in line with the earlier decision in T.C.(A)No.581 of 2008, which excluded the open terrace area from the built-up area calculation. Conclusion: The High Court dismissed the Revenue's appeals and allowed the assessee's appeals, affirming the Tribunal's decision. The Court held that the assessee is eligible for deduction under Section 80IB(10), complied with the completion certificate condition, and is entitled to proportional deduction for the flats that meet the built-up area limit. The Court also excluded the open terrace area from the built-up area calculation.
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