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2020 (9) TMI 1198 - AT - Income TaxDeduction u/s 80IB - whether the appellants are to be assessed as AOP or as individual? - income from housing project in the name of Hampton Park belongs to AOP and not in the individual capacity as co-owner - AO declined the benefit of deduction to the assessee on the premise that deduction u/s. 80IB(10) was available only to an undertaking engaged in developing and building house project subject to fulfillment of conditions laid down in sub-section (10) of section 80IB - HELD THAT - It is settled law that owner of the land as well as developer of the land both were eligible for claiming deduction u/s 80IB(10) in respect of housing project where the owner contributes the land as well as resources to develops the housing project. Thus, assessee was also eligible for claiming deduction under section 80IB(10) as it full fills all the conditions laid down under section 80IB. In the case of Sudhir Nagpal and Others Vs. ITO 2013 (2) TMI 371 - PUNJAB AND HARYANA HIGH COURT wherein agricultural land was inherited by the co-owners from their forefather and general power of Attorney was executed by all the co- owners in favour of the S appointing him to construct plinth on their joint agricultural land in the name of all the owners and to further lease out such open plinth to any party on their behalf. In this case, the issue came up whether the appellants are to be assessed as AOP or as individual. It was held that the co-owners had inherited the property from their ancestors and there was nothing to show that they had acted as AOP. It was also held that in order to asses individual to be forming AOP, the individual co-owners should have joined their resources and thereafter acquired their property in the name of AOP. The ratio of this decision is again directly applicable to the facts of share of profit eligible of deed under section 80IB of the Act. The proceeds relating to sale of plots have been deposited in a separate bank amount of the assessee and her son .and. the same has been shared equally. There was non-existence of AOP, otherwise proceeds on sale of plots would not have been deposited in a separate bank account. The assessee also filed development permission letter bearing the name of co-owners in their individual capacity. It was further pointed out that the assessee as well as Ashok Govindbhai Patel has obtained separate registration under the Service Tax act in the individual capacity and the Service Tax Return filed along with deposit of service tax in the individual capacity were also furnished. It was contended that this is not the case where two or more independent persons have joined together for acquiring land and construction housing project by pooling their joint resources. The, assessee with her son cannot be at all be said to be -voluntarily, because the land has been received by them jointly by way of; inheritance. In such cases, the association of two or more persons is a forced association of the joint legatees and therefore, the status can only be regarded as co-ownership. Assessee was a builder and developer. It carried out the project for developing the land held by assessee. Assessee received his share of profit from the same and claimed deduction of her share of profit as per provision of section 80IB (10). The AO declined the benefit of deduction to the assessee on the premise that deduction u/s. 80IB(10) was available only to an undertaking engaged in developing and building house project subject to fulfillment of conditions laid down in sub-section (10) of section 80IB. It is settled law that owner of the land as well as developer of the land both were eligible for claiming deduction under section 80IB(10) in respect of housing project where the owner contributes the land as well as resources to develops the housing project. Thus, assessee was also eligible for claiming deduction under section 80IB(10) as it full fills all the conditions laid down under section 80IB Our view is further, fortified from the decision of CIT v. Shrayanee Constructions 2012 (7) TMI 88 - KARNATAKA HIGH COURT wherein it was has held that it is not merely building housing project, which attracts provisions of section 80IB(10), it is developing and building housing project, which attracts said provisions for allowing deduction under section 80IB of the Act - Appeal of the assessee is allowed.
Issues Involved:
1. Determination of whether income from the housing project "Hampton Park" belongs to an Association of Persons (AOP) or to the individuals as co-owners. 2. Eligibility of the assessee for deduction under Section 80IB(10) of the Income Tax Act. Issue-wise Detailed Analysis: 1. Determination of Ownership Status: The primary issue was whether the income from the housing project "Hampton Park" should be assessed in the hands of an Association of Persons (AOP) or in the individual capacities of the co-owners. The assessee, an individual, claimed to be a 50% co-owner with her son in the housing project. The Assessing Officer (AO) held that the project was undertaken by an AOP/BOI/Firm and that the assessee should have filed the return in the status of an AOP to claim the deduction. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this view. However, the Tribunal noted that the land was inherited by the assessee and her son, and the project was developed as co-owners. The Tribunal emphasized that the project was carried out under co-ownership, supported by documentary evidence such as approved plans, development permission letters, joint bank accounts, and audit reports. The Tribunal referenced the decision in the assessee’s own case for the previous assessment year (AY 2011-12), where it was held that the project was undertaken in the status of co-ownership, not as an AOP. The Tribunal also cited the decision of the Hon’ble Allahabad High Court in CIT Vs. Laxmi P Da Sons, which held that a forced association due to inheritance does not constitute an AOP. 2. Eligibility for Deduction under Section 80IB(10): The second issue was whether the assessee was entitled to deduction under Section 80IB(10). The AO disallowed the deduction, asserting that the project was undertaken by an AOP, and thus, the deduction could not be claimed individually. The CIT(A) confirmed this disallowance. The Tribunal, however, found that the assessee had fulfilled all conditions for claiming the deduction under Section 80IB(10) as a co-owner. It was noted that the assessee and her son had jointly developed the project, maintained joint books of account, and shared profits equally. The Tribunal referenced several case laws, including the Hon’ble Karnataka High Court’s decision in CIT v. Shrayanee Constructions, which clarified that both the owner and developer of a housing project are eligible for deduction under Section 80IB(10) if they fulfill the required conditions. The Tribunal concluded that the assessee, as a co-owner, was eligible for the deduction under Section 80IB(10). The Tribunal also noted that the AO’s contention regarding the status of the assessee did not disentitle her from claiming the deduction, as the Form No. 10CCB recognized co-ownership. Conclusion: The Tribunal allowed the appeal of the assessee, holding that the income from the housing project belonged to the individuals as co-owners and not to an AOP. Consequently, the assessee was entitled to the deduction under Section 80IB(10). The Tribunal’s decision was based on the consistency of facts with the previous assessment year and the lack of any contrary legal provisions. Final Judgment: The appeal of the assessee was allowed, and the order was pronounced on 23.09.2020 as per Rule 34 of the Income Tax (Appellate Tribunal) Rules, 1963.
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