2019 (6) TMI 880 - HC - Income Tax

Deduction u/s. 80IB - denial of claim as composite development of housing project under six different blocks - as per revenue as both the projects were put up on the same parcel of land, the same would be one composite project and therefore the assessee would not be entitled to claim the deduction under Section 80IB(10) - HELD THAT - The legislature has nowhere provided the definition of a housing project either in the section or anywhere in the IT Act. Is it open for the Revenue to consider all the housing activities undertaken by the assessee as one project or different projects ? The Concise Oxford Dictionary (9th Edition) defines a 'project' as a plan, a scheme, a planned undertaking, a usually long-term task undertaken by a student to be submitted for assessment. We are not impressed by the submission canvassed on behalf of the Revenue that as both the projects were put up on the same parcel of land, the same would be one composite project and therefore the assessee would not be entitled to claim the deduction u/s 80IB(10). This aspect has been well dealt with by both i.e. the CIT (Appeals) as well as the Appellate Tribunal. It is not open to the Revenue to conclude the next project as part of the earlier housing project just to deny the statutory relief which the assessee is entitled to in respect of the eligible housing project. In that way the legislative intention to give a relief to the assessee who are undertaking the low housing projects will get defeated. The assessee has segregated the same and in no way mixed in these projects either in the design or in the structural manipulation or in the provision of amenities and the assessee has not claimed any relief in respect of project which admittedly does not admit the test laid down under Section 80- IB(10) of the Act. In our view, combining these two projects into one will lead to a result which manifestly will be unjust and absurd and defeat the very provisions of the deduction sections. Unless there is a clear intention of the legislature the Revenue cannot be permitted to do so. After all the assessee have obtained different commencement certificates and started on different periods of time. They are separate by time, space and statutory approvals and even in designs, maintenance of separate books of account. The Revenue, in our view, is not right in treating both the projects as one and integrated without the facts warranting for such conclusion. - Decided in favour of assessee.

Summary

Issues Involved:
1. Eligibility for deduction under Section 80IB(10) of the Income Tax Act, 1961.
2. Interpretation of "housing project" and whether multiple projects on a single parcel of land can be treated separately for tax benefits.

Issue-Wise Detailed Analysis:

1. Eligibility for Deduction under Section 80IB(10):
The primary issue revolves around whether the assessee is entitled to a deduction under Section 80IB(10) of the Income Tax Act, 1961. The Revenue argued that the entire project, comprising both row houses and residential flats, should be treated as a single unit. The Assessing Officer (AO) denied the deduction, stating that the row houses exceeded the maximum built-up area of 1500 sq. ft., thus disqualifying the entire project from the deduction.

The CIT (Appeals) and the Income Tax Appellate Tribunal (ITAT) both ruled in favor of the assessee. They observed that the assessee maintained separate accounts for row houses and flats and did not claim any deduction for the row houses. The ITAT noted, "the assessee maintained separate books of accounts for flats and row houses and he has not claimed any deduction on the row houses which are measuring from 2000 sq. ft. to 2200 sq. ft." The Tribunal cited the case of Vishwas Promoters Pvt. Ltd., where it was held that each block in a housing project could be treated separately for the purposes of Section 80IB(10).

2. Interpretation of "Housing Project":
The second issue pertains to the interpretation of what constitutes a "housing project" under Section 80IB(10). The Revenue contended that since both the row houses and residential flats were part of the same parcel of land, they should be considered a single composite project. The Tribunal, however, disagreed, stating that the projects were separate in terms of design, statutory approvals, and maintenance of accounts.

The Tribunal and CIT (Appeals) both held that it is not open for the Revenue to treat separate projects as one to deny the statutory relief. The Tribunal cited multiple judgments, including the Bombay High Court's decision in Commissioner of Income Tax vs. Vandana Properties, which stated, "the object of Section 80-IB (10) in granting deduction...is with a view to boost the stock of houses for lower and middle income groups." The Tribunal concluded that combining the projects would lead to an unjust result, defeating the legislative intent.

Conclusion:
The High Court upheld the decisions of the CIT (Appeals) and the ITAT, affirming that the assessee is entitled to the deduction under Section 80IB(10) for the residential flats. The Court emphasized that the legislative intent behind Section 80IB(10) is to promote housing for lower and middle-income groups, and the Revenue's interpretation would defeat this purpose. The appeal by the Revenue was dismissed, affirming the assessee's eligibility for the deduction.