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2020 (3) TMI 1237 - HC - Income TaxDeduction u/s.80IB(10) - assessee was not sole owner of the land on which the housing project was constructed - AO observed that, assessee is not entitled to deduction under section 80IB(10) in view of the common commencement certificate/raja-chhiththi because it includes 55 residential units of having more than 1500 sq.ft. built up area - HELD THAT - It is discernible that as there is no provision of obtaining commencement certificate from the local authority for development and construction of the residential unit having more than 1500 sq.ft area. In the facts of the present case, when the assessee claimed the deduction with respect to the residential units, which are having built up area less than 1500 sq.ft, the condition laid down under section 80IB(10)(c) is fulfilled. Therefore, whether such development permission includes the area for the residential units, which are more than 1500 sq.ft. would not be relevant for deciding eligibility to deducting under section 80IB(10) of the Act. In view of concurrent findings of fact arrived at by the CIT(A) and the Tribunal, there is no legal infirmity in the impugned orders of allowing deduction under section 80IB(10) of the Act. - Decided against revenue
Issues:
- Interpretation of Section 80IB(10) of the Income Tax Act, 1961 - Eligibility for deduction under section 80IB(10) - Commencement certificate requirements for housing projects - Disallowance of deduction under section 80IB(10) due to built-up area exceeding limits - Separate approval for projects with residential units exceeding 1500 sq.ft Interpretation of Section 80IB(10) of the Income Tax Act, 1961: The case involved a tax appeal under Section 260A of the Income Tax Act, 1961, regarding the interpretation of Section 80IB(10) in the context of a real estate developer firm engaged in housing projects. The main contention was whether the firm was eligible for deduction under this section for the assessment year 2010-11. Eligibility for deduction under section 80IB(10): The Assessing Officer disallowed the deduction claimed by the firm under section 80IB(10) as the firm was not the sole owner of the land on which the housing projects were constructed. However, the CIT(A) allowed the appeal based on the firm's compliance with the prescribed built-up area limits for residential units. The Tribunal upheld this decision, emphasizing that certain residential units were part of a separate project developed by another entity, not the appellant. Commencement certificate requirements for housing projects: The dispute also revolved around the commencement certificate for the housing projects, particularly concerning the built-up area of residential units. The appellant argued that since the units claimed for deduction met the size criteria, the inclusion of other units exceeding the limit in the same certificate should not affect their eligibility for deduction under section 80IB(10). Disallowance of deduction under section 80IB(10) due to built-up area exceeding limits: The Revenue contended that the firm was not entitled to deduction under section 80IB(10) due to the built-up area of some residential units exceeding the prescribed limit. However, the firm maintained that they did not claim deduction for those units, which were part of a separate project developed by a different entity. Separate approval for projects with residential units exceeding 1500 sq.ft: The Revenue raised concerns about the lack of separate approval for a project involving residential units exceeding 1500 sq.ft. built-up area. The Tribunal, considering the facts and legal provisions, upheld the decision of the CIT(A) regarding the eligibility of the firm for deduction under section 80IB(10) based on the specific units claimed for deduction meeting the criteria. In conclusion, the High Court dismissed the appeal, stating that the firm was eligible for deduction under section 80IB(10) as the units claimed for deduction complied with the prescribed limits. The court found no legal infirmity in the decisions of the CIT(A) and the Tribunal, emphasizing the importance of meeting the criteria specified under the relevant tax provisions for claiming deductions.
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