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2014 (7) TMI 1366 - AT - Income TaxDeduction u/s 80IB - project undertaken by the assessee was a mixed project of piece-meal sanctions - Whether residual project of development and construction undertaken by assessee complied with the requirements of section 80IB(10)? - assessee pointed out that obtaining of multiple building sanctions does not result in the project being ineligible for section 80IB(10) benefits - CIT-A allowed the deduction - HELD THAT - As some of the plots initially comprised in the layout were sold as such would not defeat assessee s entitlement for deduction u/s 80IB(10) of the Act so long as the conditions stipulated in section 80IB(10) of the Act are satisfied qua the residual project undertaken by the assessee. Factually speaking it is not in dispute that the profit/loss resulting on account of sale of certain plots as such has not entered assessee s claim of deduction u/s 80IB(10) of the Act. Therefore in our view the CIT(A) made no mistake in rejecting the aforesaid stand of the Assessing Officer and proceeding to examine whether the residual project of development and construction undertaken by assessee complied with the requirements of section 80IB(10). On obtaining of multiple building sanctions in our view the same cannot be held against the assessee. As clarified that the housing project shall be deemed to have been approved on the date of which the building plan of such housing project is first approved by the local authority. Therefore to say that because assessee had obtained multiple approvals and thus is disentitled for section 80IB(10) benefits is against the legislative mandate. Hence existence of multiple building plan approvals cannot be held against the assessee. Furthermore the requirement that the project is to be on a size of a plot of land of a minimum area of one acre is concerned the same has also to be examined not with respect to each and every individual building plan approval but with respect to the housing project as a whole. Thus in the present case the Assessing Officer erred in considering the size of individual plots of land to examine as to whether it has area of one acre or more. On this aspect also we find that the CIT(A) made no mistake in disregarding the objection of the Assessing Officer. Period specified for complying the construction of the project - As evident that with regard to the development of the housing project undertaken by the assessee last of the completion certificate is dated 31.03.2011. The claim of the Assessing Officer is that a completion certificate has also been issued by the local authority on 02.09.2011 which is the last certificate. Even if the said certificate is taken into consideration yet it does not breach the outer limit of 31.03.2012 which is stipulated date in the present case for completion of project as seen earlier. However the claim of the assessee and which has been upheld by the CIT(A) is that the said completion certificate pertains to construction on a plot which was undertaken by the purchaser himself. Assessee explained that the said plot was sold as such and the purchaser obtained the building sanction and the assessee had no role to play in the development and construction of the said plot. The aforesaid factual finding is not controverted by the Revenue before us. Accordingly the stand of the CIT(A) on this aspect is also hereby affirmed. As a result of the aforesaid discussion we find that on all the aspects raised by the Assessing Officer the CIT(A) made no mistake in upholding assessee s plea for the claim of deduction u/s 80IB(10) of the Act with respect to its housing project Flora City undertaken at Talegaon Dabhade Pune. Thus the order of the CIT(A) is hereby affirmed. - Decided in favour of assessee.
Issues Involved:
1. Eligibility for deduction under section 80IB(10) of the Income Tax Act, 1961. 2. Impact of mixed project and sale of open plots on eligibility. 3. Compliance with the completion timeline stipulated under section 80IB(10)(a)(iii). 4. Multiple building plan sanctions and their effect on the project's eligibility. 5. Minimum plot size requirement under section 80IB(10)(b). Detailed Analysis: 1. Eligibility for Deduction under Section 80IB(10): The primary grievance of the Revenue was that the CIT(A) erred in holding that the assessee satisfied all the conditions stipulated in section 80IB(10) of the Income Tax Act. The respondent-assessee, an Association of Persons (AOP), claimed a deduction u/s 80IB(10) for the profits derived from the housing project 'Flora City'. The Assessing Officer denied this claim, arguing that the project did not comply with certain conditions prescribed in section 80IB(10). The CIT(A), however, allowed the claim, leading to the Revenue's appeal. 2. Impact of Mixed Project and Sale of Open Plots: The Assessing Officer contended that the project was a mixed one involving piece-meal sanctions and the sale of plots, which disqualified it from section 80IB(10) benefits. The CIT(A) found that the sale of some plots did not affect the eligibility for deduction, as the profits from these sales were not included in the deduction claim. The CIT(A) concluded that the project remained eligible as long as the conditions stipulated in section 80IB(10) were met for the remaining part of the project. The Tribunal upheld this view, noting that the sale of some plots did not defeat the assessee's entitlement to the deduction. 3. Compliance with Completion Timeline: The Assessing Officer argued that the project should have been completed by 31.03.2011, based on the last completion certificate dated 02.09.2011. The CIT(A) clarified that, according to the amended section 80IB(10)(a)(iii), the project needed to be completed within five years from the end of the financial year in which it was first approved (i.e., by 31.03.2012). The CIT(A) found that the project was completed within this timeline, and the Tribunal affirmed this conclusion, noting that even the last completion certificate dated 02.09.2011 fell within the stipulated period. 4. Multiple Building Plan Sanctions: The Assessing Officer's objection regarding multiple building plan sanctions was also addressed. The CIT(A) and the Tribunal noted that the Income Tax Act allows for multiple sanctions and that the date of the first building plan approval is considered the date of approval for the entire project. Therefore, obtaining multiple sanctions did not disqualify the project from section 80IB(10) benefits. 5. Minimum Plot Size Requirement: The Assessing Officer argued that each unit should be considered a separate project, failing the minimum plot size requirement of one acre. The CIT(A) and the Tribunal rejected this view, stating that the project should be considered in its entirety. The Tribunal emphasized that the requirement of a minimum plot size of one acre should be examined concerning the housing project as a whole, not individual plots. Conclusion: The Tribunal found that the CIT(A) correctly allowed the assessee's claim for deduction under section 80IB(10). The project met all the stipulated conditions, including the minimum plot size, completion timeline, and eligibility criteria, despite the sale of some plots and obtaining multiple building plan sanctions. Consequently, both appeals by the Revenue were dismissed.
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