2015 (4) TMI 947 - HC - Income Tax

Fulfillment of primary condition for claim of deduction under Section 801B(10) - whether ITAT failed to consider the fact that the area of the plot for Vidhi Complex is below 1 acre and as such the primary condition for claim of deduction under Section 801B(10) of the Income Tax Act, 1961 has not been fulfilled? - whether ITAT erred in coming to a conclusion that the exclusion of DP Road does not reduce the size of the plot, while on the contrary accepting the fact that the plot in question was originally a larger plot which was bifurcated with passing of two DP roads and thus, treating one of the 3 plots i.e. the plot in question being an independent plot with net area of 3461.68 sq.mtrs.? - Held that - Orders passed by the Tribunal cannot be faulted. In the present case, we find that the assessee has complied with all the requirement of provisions of Section 80IB(10) of the Act since he has undertaken to commence the development project on 1st October, 1998 and completed the project on or before 31st March, 2008. Furthermore, it is seen that the project completion has been complied by by virtue of section 80IB(10)(d) on a plot of land which is 1.33 acres. The criteria of minimum area of 1 acre required under section 80IB(10)(a) had been met. It also complied with section 80IB(10) (c) of the Act since the area was situated within 25 kms. from the limits of Mumbai city and, therefore, the eligible for exemption of the flat of the size of 1,500 sq. ft. approximately. The Commissioner and the Tribunal also found that the commercial establishment in the present project was less than 2,000 sq. ft. Hence we are of the view that the no fault can be found with the order of the Tribunal. No substantial questions of law arise in the present case. - Decided in favour of assessee.

Summary

Issues:
- Disallowance of deduction under section 80IB(10) for exceeding commercial space limit
- Compliance with conditions for claiming deductions under section 80IB(10)
- Comparison with a similar case involving Vidhi Builders

Issue 1: Disallowance of deduction under section 80IB(10) for exceeding commercial space limit
The case involved an appeal by the revenue for the assessment years 2005-06 and 2006-07, challenging the disallowance of a deduction claimed under section 80IB(10) of the Income Tax Act, 1961. The Assessing Officer disallowed the deduction on the grounds that the project exceeded the prescribed limit of 2000 sq. ft. of commercial space in certain buildings. The Commissioner of Income Tax (Appeals) and the Tribunal, however, held that the assessee had complied with the conditions for claiming deductions under section 80IB(10). The Tribunal found that the project was completed within the specified time frame, and the commercial area did not exceed 2000 sq. ft. The Tribunal also noted that the assessing officer had misunderstood the facts regarding the project's development and commercial space allocation.

Issue 2: Compliance with conditions for claiming deductions under section 80IB(10)
The High Court analyzed whether the assessee had met the requirements of section 80IB(10) of the Act. It was observed that the project was commenced on time and completed within the stipulated period. The project was undertaken on a plot of land measuring 1.33 acres, meeting the minimum area requirement of 1 acre as per section 80IB(10)(a). Additionally, the project's location within 25 km from Mumbai city limits satisfied the conditions under section 80IB(10)(c). The court concluded that the assessee had fulfilled all the provisions of section 80IB(10) and was eligible for the exemption.

Issue 3: Comparison with a similar case involving Vidhi Builders
The judgment referred to a case involving Vidhi Builders to draw comparisons. The court noted that the Vidhi complex failed to comply with the basic condition of section 80IB(10) as it was constructed on a land area less than 1 acre. In contrast, the present case demonstrated compliance with all the requirements of section 80IB(10), including project commencement and completion within the specified timelines. The court distinguished the present case from the Vidhi Builders case, emphasizing that the assessee had met the statutory conditions for claiming deductions under section 80IB(10).

In conclusion, the High Court dismissed the appeals filed by the revenue, as it found no fault with the Tribunal's orders. The court held that no substantial questions of law arose in the present case, as the assessee had adhered to the conditions stipulated under section 80IB(10) and was entitled to the claimed deduction.