2016 (4) TMI 872 - AT - Income Tax

Claim of deduction under section 80IB(10) - connotation of meaning of one acre i.e. the size of plot of land on which the housing project has to be developed in order to avail the deduction under section 80IB(10) of the Act - Held that - Where 1 acre is equal to 4840 sq. yds. and one sq.yd. is equal to 0.83612736 sq. mtrs., so, one acre is equal to 4046.8564224 square meters. In the entirety of the above said facts and circumstances and information available in public domain and the unit measurement prevalent in the State of Maharashtra i.e. Guntas, we hold that the unit measurement of one acre is equal to 4046.8726 sq. mtrs. Even the information on Wikipedia in Marathi shows one acre is equal to 4046.8726 sq. mtrs. In the totality of the above said facts and circumstances, we find no merit in the claim of assessee in this regard that one acre is equal to 4000 sq. mtrs. Coming to the claim of the assessee that PCNTDA in the layout plan has mentioned 2500 1500 P.C and in Devnagari one acre is also written. In other words, the area of 4000 sq. mtrs. is equivalent to one acre. In the first instance, PCNTDA has communicated that it had leased out 4000 sq. mtrs. of land to the Lessee of plot which was developed by the assessee. The layout plan which is annexed to the Lease Deed, perusal of the same reflects the plots were demarcated into bulk lands of various measurements and one portion of the land in the middle of the layout plan is allocated to the Lessee Mr. Patil. On one side of the said plot was written as 2500 1500 P.C. i.e. 4000 sq. mtrs. a road has been demarcated next to it, which is 172 roads 40s, etc. The assessee before us has pointed out that only portion of the land measuring 4000 sq. mtrs. was allotted and the roads were developed by PCNTDA itself. Even the garden was developed by PCNTDA itself. Accordingly, we hold that where the land allocated to Mr. Patel was only 4000 sq. mtrs. and the balance land had been marked for the development of side road out of original demarcation for one acre, but after allocation of 4000 sq. mtrs. and demarcation of land for roads, total plot was not one acre. Where the unit measurement for land is to be recognized as square meter and the assessee has developed its housing project on a plot of land measuring 4000 sq. mtrs., we find no merit in the claim of the assessee that it had fulfilled the conditions laid down in section 80IB(10) of the Act. Since the requirement of the Act is minimum area of one acre, which is equivalent to 4046.8726 sq. mtrs., the conditions laid down in section 80IB(10) of the Act are not fulfilled in the case of assessee and hence, it is not entitled to the said claim. Thus Claim of the assessee with regard to the area of row house No.1. having not been fulfilled the first condition of minimum area of land not entitled to the claim of deduction under section 80IB(10) - Decided against assessee

Issues Involved:
1. Deduction under section 80IB(10) of the Income-tax Act, 1961.
2. Eligibility of plot size for deduction under section 80IB(10).
3. Built-up area of residential units for deduction under section 80IB(10).
4. Prorata claim of deduction under section 80IB(10).

Issue-wise Detailed Analysis:

1. Deduction under section 80IB(10) of the Income-tax Act, 1961:
The primary issue revolves around the eligibility of the assessee's claim for deduction under section 80IB(10) of the Income-tax Act, 1961. The section mandates certain conditions to be fulfilled, including the size of the plot and the built-up area of the residential units. The assessee claimed a deduction for the "Eden Garden" project, which was contested by the Assessing Officer and the CIT(A) on the grounds that the plot size was less than one acre and one of the residential units exceeded the maximum permissible built-up area.

2. Eligibility of Plot Size for Deduction under Section 80IB(10):
The first aspect of the issue was whether the plot size of 4000 sq. mtrs. (less than one acre) disqualified the assessee from claiming the deduction. The Assessing Officer and CIT(A) both concluded that the plot size did not meet the minimum requirement of one acre as stipulated by section 80IB(10)(b). The assessee argued that one acre should be considered as 4000 sq. mtrs. based on the Standards of Weights and Measures Act, 1956, and the local understanding of the measurement. However, the Tribunal upheld the view that one acre equals 4046.8726 sq. mtrs., based on various authoritative sources, including Oxford dictionary, Wikipedia, and official websites. Consequently, the plot size of 4000 sq. mtrs. did not meet the requirement, and the deduction was denied.

3. Built-up Area of Residential Units for Deduction under Section 80IB(10):
The second aspect was whether the built-up area of one of the residential units exceeding 1500 sq. ft. disqualified the assessee from claiming the deduction. The Assessing Officer noted that the built-up area of twin bungalow No.1 was 183 sq. mtrs. (exceeding 1500 sq. ft.). The CIT(A) also upheld this view, and the Tribunal did not address this issue separately as the assessee had already failed to meet the plot size requirement.

4. Prorata Claim of Deduction under Section 80IB(10):
The assessee alternatively argued for a prorata deduction for the eligible units. However, since the primary conditions regarding the plot size were not met, the Tribunal did not consider this argument. The grounds of appeal raised by the assessee were dismissed.

Conclusion:
The Tribunal concluded that the assessee did not meet the essential conditions laid down in section 80IB(10) of the Income-tax Act, 1961, particularly the minimum plot size requirement of one acre (4046.8726 sq. mtrs.). As a result, the claim for deduction was denied, and the appeal was dismissed.

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