2021 (7) TMI 112 - HC - Income Tax

Deduction u/s 80IB(10) - Whether Tribunal was right in holding that assessee who is only a owner of the land and had out sourced the work of constructing the building and had realised the sale proceeds in the form of constructed area is entitled for deduction u/s 80IB? - HELD THAT - As following the ratio laid down by the Hon'ble Division Bench of this Court in the judgment reported in Bashyam Constructions (P) Ltd 2019 (2) TMI 906 - MADRAS HIGH COURT the questions of law raised in the appeals are decided against the revenue and in favour of the assessee.

Summary

Issues Involved:
- Interpretation of Section 80IB(10) for deduction eligibility
- Treatment of assessee as developer or builder
- Eligibility for deduction under Section 80IB(10) when construction work is outsourced
- Assessment of ownership criteria for claiming deduction under Section 80IB(10)
- Appeal's status when Tribunal allows assessee's appeal but dismisses Revenue's appeal

Analysis:

Interpretation of Section 80IB(10) for Deduction Eligibility:
The High Court examined whether the assessee satisfied the conditions under Section 80IB(10) and was eligible for deduction. The Court referred to previous judgments and emphasized that the deduction is project-oriented, not individual-oriented. They held that the project's development and construction activities qualified for the deduction, regardless of ownership criteria. The Court rejected the Revenue's argument that ownership was a mandatory criterion for claiming the deduction under Section 80IB(10).

Treatment of Assessee as Developer or Builder:
The Court analyzed whether the assessee could be treated as a developer or builder eligible for claiming benefits under Section 80IB(10). They highlighted the importance of project development and construction activities, stating that the deduction was specific to the project and not the individual. The Court cited cases where similar questions were decided in favor of developers, emphasizing the project's nature over individual ownership.

Eligibility for Deduction under Section 80IB(10) When Construction Work is Outsourced:
The Court considered whether the assessee could claim a deduction under Section 80IB(10) even though the construction work was outsourced to a subcontractor. They reiterated that the key factor was the development and construction of the project, irrespective of the ownership of the land. The Court emphasized that the deduction was aimed at encouraging housing projects and did not require the developer to own the land.

Assessment of Ownership Criteria for Claiming Deduction under Section 80IB(10):
The Court addressed the issue of ownership criteria for claiming deductions under Section 80IB(10). They emphasized that the deduction was available to undertakings involved in developing and building housing projects approved by local authorities. The Court rejected the Revenue's argument that ownership was a mandatory requirement for claiming the deduction, citing previous judgments and affirmations by the Supreme Court.

Appeal's Status When Tribunal Allows Assessee's Appeal but Dismisses Revenue's Appeal:
Regarding the appeal's status when the Tribunal allowed the assessee's appeal but dismissed the Revenue's appeal, the Court held that the Revenue's appeals should have been dismissed and not deemed infructuous. Following the precedent set by a Division Bench judgment, the Court dismissed the appeals in favor of the assessee, based on the previous decision's findings. The Court declined to provide a separate finding for the appeals related to the Revenue due to the decision made in favor of the assessee.

In conclusion, the High Court's judgment clarified the eligibility criteria for claiming deductions under Section 80IB(10) and emphasized the project-centric nature of the deduction, irrespective of individual ownership. The Court's analysis focused on promoting housing projects and encouraging development activities, ultimately ruling in favor of the assessee based on established legal principles and precedents.