2018 (4) TMI 1852 - AT - Income Tax

Eligibility of deduction u/s 80IB - total area of the land on which the project was undertaken is less than the one acre of land - assessee argued that he had set apart certain portion of land for making DP road as per municipality order - HELD THAT - For getting the sanction for development of housing project on the plot of land which measured to 4077.21 sq.mtrs. by actual measurements then the said sanction would be accorded where the assessee gives up area for DP road measuring 218.49 sq.mtrs. The said was the condition for getting permission to develop the housing project at the said place. The learned Authorized Representative for the assessee before us has pointed out that against the said area left for DP road the assessee was entitled to increased FSI. In other words the assessee gained from leaving the land for DP road. The Courts have time and again held that the condition which needs to be fulfilled for claiming the deduction as per clause (b) is the actual measurement of plot of land on the date of start of development. The assessee had in the present set of facts purchased the plot of land which measured slightly more than one acre at 4077.21 sq.mtrs. Basic condition of fulfillment of having plot area of one acre stands fulfilled by the assessee. The said area had to be set apart only as per the requirements of different rules under the Municipality Act but the same does not lead to the conclusion that the assessee had less than one acre of plot of land area for its development. The gross total area was more than one acre and hence the assessee was entitled to claim the deduction under section 80IB(10) of the Act irrespective of the fact that the assessee had set apart certain portion of land for making DP road. There is no merit in the orders of authorities below in denying the claim of deduction under section 80IB(10) of the Act. Accordingly the Assessing Officer is directed to allow the deduction under section 80IB(10) of the Act as the assessee had fulfilled the condition of holding plot of land having area of more than one acre The finding of CIT(A) that the original plot size itself in the hands of assessee was less than one acre was not correct in view of actual measurements of land as per triangulation method what had to be seen as the actual measurement of plot of land and not the plot size mentioned in local language of 40R. The DVO had also referred to same area of 4077.21 sq.mtrs. Reversing the order of CIT(A) claim of assessee of 80IB(10) deduction is allowed. - Decided in favour of assessee.

Summary

Issues Involved:
Claim of deduction under section 80IB(10) of the Income Tax Act based on plot size discrepancy and road reservation.

Detailed Analysis:

1. Claim of Deduction under Section 80IB(10):
The primary issue in the present appeal revolves around the claim of deduction under section 80IB(10) of the Income Tax Act. The conditions for claiming this deduction require the plot area to be one acre or more. The initial denial of the deduction by the Assessing Officer was based on the perceived inadequacy of the plot size. However, the Tribunal, in a previous order, highlighted discrepancies in the plot size mentioned in different documents. The actual measurement of the plot using triangulation method revealed a size of 4077.21 sq.mtrs, which exceeded one acre. The contention of the assessee was that the area set aside for a DP road should be considered part of the gross plot area for deduction purposes, as it was a requirement for development permissions. The Tribunal emphasized that the actual measurement of the plot, not just the size mentioned in local language, was crucial for determining eligibility for the deduction.

2. Interpretation of Plot Size and Conditions:
The Tribunal referenced a previous case, Bunty Builders Vs. ITO, which emphasized that the area available for development should include space reserved for amenities as per municipal norms. In the present case, the plot size discrepancy arose from the area set aside for a DP road, which was a prerequisite for project development. The Tribunal reiterated that the actual measurement of the plot at 4077.21 sq.mtrs was the determining factor for eligibility for the deduction. The developer's compliance with municipal requirements, including setting aside land for amenities, did not negate the entitlement to the deduction as long as the basic condition of having a plot area exceeding one acre was met.

3. Decision and Rationale for Allowing the Deduction:
After thorough analysis, the Tribunal concluded that the assessee had fulfilled the condition of holding a plot of land exceeding one acre, despite allocating a portion for a DP road as mandated by authorities. The Tribunal emphasized that the gross total area exceeding one acre was the crucial factor for allowing the deduction under section 80IB(10) of the Act. The Tribunal overturned the CIT(A)'s decision and directed the Assessing Officer to grant the deduction, considering the actual measurement of the plot rather than the size mentioned in local language. The grounds of appeal raised by the assessee were allowed, and the appeal was consequently granted in favor of the assessee.

In summary, the judgment addressed the discrepancy in plot size measurement, the significance of actual plot measurement for deduction eligibility, and the inclusion of reserved areas for amenities in determining the plot size for claiming deductions under section 80IB(10) of the Income Tax Act.