2017 (8) TMI 645 - HC - Income Tax

Entitled to benefits under Section 80-IB(10) - developed project on less than one acre of land - Held that - Two authorities viz. the CIT as well as the Tribunal conclusion that the project of Saket-Dham in respect of which exemption is claimed under Section 80-IB(10) of the Act was a project constructed on 1201 sq. mts. is on the basis of the sanction dated 02.01.2003 issued by the Municipal Corporation in respect of the construction of Saket-Dham stating that the same is on land having an area of 1201 sq. mts. Further, the agreement of sale of flats entered into by the appellantassessee in building of Saket-Dham also records the fact that the project has been developed on 1201 sq. mts. of land. This view of CIT has also been re-iterated by the Tribunal in the impugned order. In the above view, the submission of Mr. Shrivastava that the project was sanctioned by the Nagpur Municipal Corporation of Saket-Dham on a land of 4047 sq. mts. cannot be accepted, as it was not even brought on record before the Authorities under the Act. There is nothing on record to indicate that before the Tribunal, the aforesaid submission was even made by the appellant-assessee. Therefore, in the above view, the concrete findings by the two authorities on facts cannot even be said to be perverse in any manner. So far as the submission of appellant-assessee that he is entitled to balance land of 2846 sq. mts. from Mr. Trivedi. This in view of the suit which has been filed, should be subject to extending the benefit under Section 80-IB(10) of the Act, cannot be accepted. On date the project Saket-Dham was completed and even till the date, the appellant-assessee does not have possession of the balance land of 2846 sq. mts. and the right which he is claiming has yet to be crystallized. The deduction under Section 80-IB(10) of the Act cannot be granted on a speculative basis of a future uncertain event. The requirement of section has to be satisfied when the deduction/exemption is claimed. Nothing has been shown to us which would prohibit the CIT from disallowing the benefit of exemption under Section 80-IB(10) of the Act, while exercising powers of Revision. Moreover, no fault can be found with the exercise of powers of the CIT. - Decided against assessee.

Summary

Issues:
1. Entitlement to benefits under Section 80-IB(10) of the Income Tax Act, 1961 based on land area for a housing project.
2. Disallowance of benefit in Section 263 proceedings.

Analysis:

Issue 1: Entitlement to benefits under Section 80-IB(10)
The appellant-assessee claimed a deduction under Section 80-IB(10) of the Act for a housing project named 'Saket-Dham' for the Assessment year 2004-2005. The appellant claimed the project was on a land of 4047 sq. mts., exceeding one acre, based on a sanctioned plan from Nagpur Municipal Corporation. However, the Commissioner of Income Tax (CIT) found that the project was developed on only 1201 sq. mts. of land, not meeting the one-acre requirement under Section 80-IB(10). The CIT directed the tax to be computed after disallowing the claimed deduction. The Tribunal upheld this decision, emphasizing that the project did not meet the necessary land area criteria for the deduction.

Issue 2: Disallowance of benefit in Section 263 proceedings
The CIT revised the assessment order, denying the appellant the benefit of deduction under Section 80-IB(10) due to the project not meeting the land area requirement. The appellant argued that they were entitled to an additional 2846 sq. mts. of land, subject to pending litigation, which should be considered part of the project area. However, the Court held that as of the completion of the project, the appellant did not possess the additional land, and the right claimed was uncertain and speculative. The Court affirmed the CIT's decision to disallow the benefit of exemption under Section 80-IB(10) based on the actual land area where the project was developed.

In conclusion, the Court dismissed the appeal, ruling in favor of the Revenue and against the appellant-assessee, upholding the decisions of the CIT and the Tribunal regarding the disallowance of the deduction under Section 80-IB(10) of the Income Tax Act, 1961.