2022 (11) TMI 1303 - HC - Income Tax

Deduction u/s 80IB - some of the flats constructed in Tower A of its housing project had exceeded the area of 1000 sq.ft. - structural changes noticed in the building as on the date of survey - Facts at all unearthed during survey proceedings which clearly suggest non compliance of the requirement of provision of section 80IB - HELD THAT - We have also gone through the very comprehensive order passed by the CIT, which has discussed all the issues which have been flagged by the survey team point by point. The statement of one Samir Makhani to the extent that he had purchased a single unit with one entrance, but under two agreements in regard to Flat No.1603 and 1604, also appears to have been subsequently changed when he stated that changes have been made in the said flats by merging the same and while Flat No.1603 was standing in his name, Flat No.1064 was in the name of his mother and that two separate agreements had been executed. The conclusions drawn by the CIT (Appeals) based on the material on record goes to show that the view expressed and subsequently upheld by the Tribunal cannot be in any way said to be a view or a conclusion which is perverse. The question essentially involved in the case, which had to be established beyond any doubt by the Revenue, ought to have been that the respondent had not only built but also sold the residential units, in respect of which the benefit of 100% deduction was claimed with an area of more than 1000 sq.ft., which only then could have justified the action of the Revenue in denying the benefit of 100% deduction under the said provision. In the present case, however, the revenue has failed to establish that fact. Not only this even the completion certificate could not have been issued by the competent authority, as rightly held by the Tribunal, if there was any violation of the approved plans by the municipal authorities. No substantial question of law arises. Appeal is dismissed.

Summary

Issues:
1. Interpretation of Section 80IB(10) of the Income Tax Act, 1961.
2. Eligibility for deduction under Section 80IB(10) based on the area of residential units.
3. Compliance with the requirements of Section 80IB(10) for a housing project.
4. Consideration of survey reports and documents in determining eligibility for tax deduction.
5. Assessment of completion certificate and approved plans in relation to tax benefits.

Analysis:
1. The primary issue in this case revolves around the interpretation of Section 80IB(10) of the Income Tax Act, which allows for a 100% deduction on profits from housing projects meeting specific criteria. The key condition discussed is the area of residential units not exceeding 1000 sq.ft. in certain locations as per the Act.

2. The dispute arises from the denial of deduction to the respondent for a residential project in Mumbai under Section 80IB(10) due to alleged non-compliance with the area requirement. The Assessing Officer based this decision on a survey report from 2011, claiming that some flats exceeded the specified area limit.

3. The respondent argued that the project was completed in 2008, with all units meeting the area criteria as per BMC-approved plans, occupancy certificates, possession letters, and agreements with buyers. The CIT (Appeals) supported this argument, emphasizing that each flat was a separate unit as per records and documents.

4. The Tribunal upheld the CIT (Appeals) view, emphasizing that a completion certificate was issued in 2008 only after the project was constructed as per approved plans. The Tribunal found no evidence of non-compliance before the 2011 survey and dismissed the Revenue's appeal against the deduction.

5. The Court affirmed the Tribunal's decision, stating that the Revenue failed to prove that the respondent sold units exceeding 1000 sq.ft. or violated approved plans. The completion certificate issuance indicated compliance, and the Tribunal's factual findings were upheld, leading to the dismissal of the appeal.

6. In a similar appeal (Income Tax Appeal No.83 of 2018), the Court applied the same reasoning and decision as in the main appeal, as the issues and facts were identical, resulting in the dismissal of the second appeal.

By analyzing the survey reports, compliance with statutory requirements, and factual findings, the Court affirmed the eligibility of the respondent for the tax deduction under Section 80IB(10) for the housing project in question.