2015 (11) TMI 582 - AT - Income Tax

Eligibility of benefit of section 80IB(10) - Held that - The housing project of the assessee at Bhujbal Township is eligible for deduction u/s. 80IB(10) of the Act. In respect of housing project at Damodar Residency is concerned assessee has claimed deduction u/s. 80IB(10) in respect of residential buildings A2 and A3 only. Thus, the total area of plot on which the residential project is developed by the assessee stands on land measuring more than 1 acre (conversion 1 acre 4047 Sq. Mtrs.). Even if the project developed by the assessee is considered as the part of the larger project even then the area of plot is much more than the minimum area specified under the provisions of section 80IB(10) of the Act. There is no bar to claim deduction u/s. 80IB(10) on the housing project which has been developed on a plot of land having area more than 1 acres, even if some other residential projects are already in existence thereon. So far as the objection of the Department that the land on which the housing project is developed is not owned by the assessee and is still undivided, we do not find any merit. The Hon ble Madras High Court in the case of CIT Vs. Sanghvi and Doshi Enterprise (2012 (12) TMI 84 - MADRAS HIGH COURT) has held that ownership of land is not a criteria to decide status of developer to claim deduction u/s. 80IB(10). The provisions of section 80IB(10) does not require that the developer who owns the land is only eligible to claim deduction u/s. 80IB(10). Thus, in the facts of the case and the case laws discussed above, we are of the considered view that the authorities below have erred in coming to the conclusion that the housing project of the assessee at Damodar Residency is not eligible to claim deduction u/s. 80IB(10) of the Act. The appeals of the assessee are allowed in all the three impugned assessment years and the Assessing Officer is directed to grant deduction u/s. 80IB(10) to the assessee on the housing project at Damodar Residency. - Decided in favour of assessee.

Summary

Issues Involved:
1. Deduction under Section 80IB(10) of the Income Tax Act, 1961 for the housing project at 'Bhujbal Township.'
2. Deduction under Section 80IB(10) of the Income Tax Act, 1961 for the housing project at 'Damodar Residency.'

Issue-wise Detailed Analysis:

1. Deduction under Section 80IB(10) for 'Bhujbal Township':

The assessee, a builder and developer, developed a residential project at 'Bhujbal Township,' situated on ancestral property of the Bhujbal Family. The project included three buildings (B2, B5, and B9) on a plot measuring 4,902 Sq. Mtrs. The assessee claimed deduction under Section 80IB(10) for the assessment year 2007-08, which was initially denied by the Assessing Officer on the grounds that the plot was less than the required 1 acre. However, the Commissioner of Income Tax (Appeals) upheld the claim, and the Tribunal dismissed the Revenue's appeal, affirming the eligibility for deduction.

For the assessment years 2008-09 and 2009-10, the Assessing Officer again disallowed the deduction, citing the Department's pending appeal before the Bombay High Court. The Tribunal reiterated its previous decision, confirming that the project met the criteria for deduction under Section 80IB(10). The Tribunal emphasized that no stay or reversal from the High Court was presented, thereby dismissing the Revenue's appeals and upholding the deduction for the 'Bhujbal Township' project.

2. Deduction under Section 80IB(10) for 'Damodar Residency':

The second project, 'Damodar Residency,' involved the development of seven buildings on a plot measuring 14,400 Sq. Mtrs. The assessee claimed deduction for residential buildings A2 and A3, constructed on a plot measuring 4,100 Sq. Mtrs., which exceeds the 1-acre requirement. The Assessing Officer denied the deduction, arguing that the plot was less than 1 acre and that the land was undivided and not owned by the assessee.

The Commissioner of Income Tax (Appeals) upheld the denial, but the Tribunal found these conclusions erroneous. The Tribunal noted that the total project area was 3 acres, and the specific plot for buildings A2 and A3 met the 1-acre requirement. The Tribunal cited the Bombay High Court's decision in CIT Vs. Vandana Properties, which clarified that Section 80IB(10) does not mandate the plot to be vacant and allows for multiple projects on a single plot exceeding 1 acre.

Regarding the ownership issue, the Tribunal referred to the Madras High Court's ruling in CIT Vs. Sanghvi and Doshi Enterprise, stating that ownership of land is not a prerequisite for claiming the deduction under Section 80IB(10). The Tribunal concluded that the 'Damodar Residency' project met all conditions for the deduction and directed the Assessing Officer to grant the deduction for the assessment years 2008-09, 2009-10, and 2010-11.

Conclusion:

The Tribunal allowed the assessee's appeals for the 'Damodar Residency' project and dismissed the Revenue's appeals for the 'Bhujbal Township' project, affirming the eligibility for deductions under Section 80IB(10) for both housing projects.