2019 (5) TMI 1126 - AT - Income Tax

Deduction u/s 80-IB(10) in respect of the project at Gangai Nagar, Velachery - deduction in respect of the built-up area exceeding 1500 sq ft on a proportionate basis. - HELD THAT - The assessee claimed deduction u/s 80IB(10) of the Act for the same project from the AY 2007-08 onwards. This Tribunal has allowed the assessee s claim for the AY 2007-08. On Revenue s appeal, the Hon'ble Jurisdictional High Court has decided the issue in favour of the assessee for the AY 2007-08 2014 (11) TMI 610 - MADRAS HIGH COURT but held that the assessee is entitled to deduction in respect of the built up area exceeding 1500 sq ft on a proportionate basis. For this assessment year, the CIT (A) gave a finding, inter alia, that the project was designed as a composite project at the proposed site at Survey No.486/1 and 482 at New Secretariat Colony, Velachery, Chennai. The project of the assessee was also in an area of more than one acre. The approvals were also obtained on unit basis only for the benefit of taking advantage of the relevant rules of the Local Authority. Further, from the order of the CIT (A), it is apparent that he had arrived at the conclusion in favour of the assessee after considering the facts of the case and the decision of various higher judiciaries on the identical issue etc. On identical facts and circumstances, this Tribunal allowed the assessee s appeal in AY 2008-09, supra. Therefore, assessee s appeal is allowed. However, the assessee is entitled to deduction in respect of the built-up area exceeding 1500 sq ft on a proportionate basis. - Decided partly in favour of revenue

Summary

Issues:
1. Eligibility for deduction u/s 80-IB(10) for property development project.
2. Compliance with conditions for deduction under section 80-IB(10).
3. Impact of project size and unit construction on deduction eligibility.

Detailed Analysis:
1. The appeal was filed by the Revenue against the order of the Ld CIT (A)-V, Chennai regarding the eligibility of the assessee, a property developer, for deduction u/s 80-IB(10) for the assessment year 2009-10. The AO denied the deduction due to the assessee being considered a 'contractor' not a 'developer' as required by the Act, lack of completion certification from the local authority, and construction of units exceeding the maximum limit of 1500 sq. ft per unit. The CIT (A) allowed the claim for the AY 2007-08, leading to the Revenue's appeal based on various grounds challenging the eligibility of the assessee for the deduction.
2. The Revenue contended that the project did not meet the conditions specified under section 80-IB(10), including the minimum area requirement of one acre for the project site. The approval for construction was obtained for two separate plots, each measuring less than an acre, which, according to the Revenue, disqualified the project from the deduction. Additionally, the construction of units exceeding 1500 sq. ft per unit was highlighted as non-compliant with the Act's provisions, affecting the eligibility for the deduction.
3. The Tribunal considered the previous decisions in the assessee's case for AY 2007-08 and AY 2008-09, where deductions were allowed for the project in question. Citing the High Court's decision and the Tribunal's findings, it was concluded that the project qualified as a composite project in an area exceeding one acre, meeting the necessary conditions for deduction u/s 80-IB(10). The Tribunal directed the AO to allow the deduction for the built-up area exceeding 1500 sq. ft on a proportionate basis, in line with the previous judicial decisions and the Act's provisions. Consequently, the Revenue's appeal was partly allowed based on the grounds raised.

In conclusion, the judgment addressed the issues of eligibility for deduction under section 80-IB(10) for a property development project, compliance with the specified conditions, and the impact of project size and unit construction on deduction eligibility. The decision was based on previous judicial findings and the Act's provisions, ultimately allowing the deduction for the project while emphasizing compliance with the stipulated requirements.