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2013 (11) TMI 1745 - AT - Income TaxDetermination of a project as Housing project u/s-80-IB(10) - Approval of Project and Completion date as per Sec-80-IB(10) - Project undertaken a works contract - Undertaken Contract risk or Investment risk - HELD THAT - the project was considered to be an housing project, which is within the ambit of section 80IB(10) of the Act. Therefore, Court did not find any infirmity in the order of the ld. CIT(Appeals) on this issue and the ground raised by the Revenue stands dismissed. The method adopted by the assessee is according to his business convenience and in our opinion, the housing project is on the size of plot of land having more than 1 acre and therefore, on this account, the benefit available under section 80IB(10) cannot be denied and the ld. CIT(Appeals), after discussing in detail has held that the housing project constructed by the assessee is in 1 acre of land and we find no reason to interfere with the order of the ld. CIT(Appeals). Accordingly, the issue raised by the Revenue stands dismissed. The project executed by the assessee was not of the nature of works contract and the assessee undertook investment risk. The ownership is not an essential condition to get the benefit under section 80IB(10). In this case, the assessee being a developer as well as builder is entitled for deduction under section 80IB(10) of the Act. The decision in this case of CIT v. Vandana Properties 2012 (4) TMI 54 - BOMBAY HIGH COURT CTR 258 CIT v. Sanghvi and Doshi Enterprise 255 CTR (Mad) 156 2012 (12) TMI 84 - MADRAS HIGH COURT were followed. In the result, the appeal filed by the Revenue and the Cross Objection filed by the assessee are dismissed.
Issues Involved:
1. Whether the project qualifies as a housing project under section 80IB(10) of the Income Tax Act. 2. Whether the project is of the nature of a works contract or if the assessee undertook investment risk. 3. Whether the conditions pertaining to dates of approval, dates of completion, and area of the project were adhered to. 4. Whether the condition with respect to built-up area was adhered to. Detailed Analysis: 1. Housing Project Qualification: The Assessing Officer (AO) argued that the project did not qualify as a housing project under section 80IB(10) because the building plan approval was obtained individually for each housing unit rather than as a whole project. The AO also contended that the sale of divided shares of land at different prices indicated a housing scheme rather than a housing project. The Commissioner of Income Tax (Appeals) [CIT(A)] disagreed, noting that the term "housing project" is not explicitly defined in the Income Tax Act. The CIT(A) interpreted the term in common parlance, meaning a single building or group of buildings with several residential units. The CIT(A) emphasized that the project had received building plan approval from the local authority, which should be sufficient for section 80IB(10) compliance. The CIT(A) concluded that the project qualifies as a housing project and is eligible for the deduction. 2. Nature of Contract: The AO asserted that the project was a works contract because the land remained in the name of the original owners, and the assessee was merely a confirming authority. The AO argued that the assessee undertook contract risk rather than investment risk. The CIT(A) found that the assessee had entered into agreements with landowners, paid substantial advances, developed the land, and constructed houses. The CIT(A) noted that the assessee had full control and dominance over the project, fulfilling the role of a developer and builder rather than a contractor. The CIT(A) referenced various judicial precedents supporting this view and concluded that the project was not a works contract, and the assessee undertook investment risk. 3. Adherence to Approval and Completion Conditions: The AO claimed that the project did not meet the conditions of section 80IB(10) regarding the dates of approval, dates of completion, and the area of the project. The AO argued that the initial approval for three houses on 5988 sq. ft. of land did not meet the one-acre minimum requirement. The CIT(A) clarified that the project covered 14.75 acres, with all necessary infrastructure developed. The CIT(A) noted that the layout approval date is irrelevant for section 80IB(10) compliance; instead, the building plan approval date is crucial. The CIT(A) confirmed that the project received building plan approval for the first three houses on 06.05.2005 and for the remaining houses by 29.03.2007, meeting the required timelines. The CIT(A) concluded that the project adhered to the conditions of section 80IB(10). 4. Built-Up Area Compliance: The AO argued that the built-up area exceeded the 1500 sq. ft. limit if the private terrace area was included, referencing the ITAT decision in Sanghvi and Doshi Enterprises. The CIT(A) disagreed, stating that the terrace area should not be included in the built-up area as it is not a projection or balcony. The CIT(A) provided detailed calculations showing that the built-up area of each unit was 1465.03 sq. ft., within the 1500 sq. ft. limit. The CIT(A) referenced several judicial decisions supporting this view and concluded that the project complied with the built-up area condition. Conclusion: The Tribunal upheld the CIT(A)'s decision, confirming that the assessee's project qualifies as a housing project under section 80IB(10), is not a works contract, adhered to the necessary approval and completion conditions, and met the built-up area requirements. The appeal filed by the Revenue and the Cross Objection filed by the assessee were both dismissed.
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