2005 (8) TMI 329 - AT - Income Tax

Deduction u/s 80-IB - business of development and construction of housing projects - HELD THAT - The deduction u/s 80-IB has been claimed by the assessee-builder and the plot of land that the assessee-builder had for building the impugned housing project had an area of only 3800 sq. mtrs., which was much less than one acre. Further, as pointed out by the ld. D.R., there is nothing on record to show that the ownership of the land which was to be used as open space was transferred by the MAEER in favour of the housing-societies. Also, the condition given in clause (b) of sub-section (10) of section 80-IB cannot be treated as fulfilled by applying an arithmetical exercise on a notional basis. What is very clearly required by the above provision is that the size of the plot of land on which the housing project is built should have a minimum area of one acre. There is no ambiguity in the language of the clause (b) of section 80-IB(10). The area of the plot of land on which the impugned housing project was built by the assessee-builder, was only 3800 sq. mtrs., which was much less than one acre. In the circumstances, therefore, we see no infirmity in the conclusions reached by the CIT(A) and his order is accordingly upheld. In the result, the appeal filed by the assessee is dismissed.

Summary

Issues involved: Claim for deduction under section 80-IB.

Comprehensive Analysis:

Issue 1: Claim for deduction under section 80-IB
The appeal was against the order of the CIT(A) for assessment year 2001-02, focusing on the assessee's claim for deduction under section 80-IB. The assessee, a partnership firm engaged in housing projects, claimed deduction under section 80-IB(10) for the entire net profit of Rs. 81,83,630. The Assessing Officer disallowed this claim, which was upheld by the CIT(A), leading to the present appeal.

Issue 2: Interpretation of Section 80-IB(10)
The primary contention was whether the assessee fulfilled the conditions of section 80-IB(10), specifically clause (b) stating the project must be on a plot of land with a minimum area of one acre. The appellant argued that the plot area, when combined with open space provided by another entity, exceeded one acre, thus meeting the requirement. However, the respondent contended that the project's plot area was only 3800 sq. mtrs, falling short of one acre, and therefore, the claim was rightly rejected.

Issue 3: Legal Interpretation and Precedents
The Tribunal emphasized strict construction of tax statutes, citing the principle that nothing can be implied in a taxing act beyond what is explicitly stated. Referring to relevant laws and rules, the Tribunal concluded that the compromise arrangement between entities did not fulfill the specific condition of clause (b) of section 80-IB(10), which mandates a minimum one-acre plot for the project.

Conclusion
The Tribunal upheld the orders of the lower authorities, dismissing the appeal. It was established that the plot area for the housing project was less than one acre, failing to meet the statutory requirement of section 80-IB(10). The compromise arrangement and open space provision did not alter the fact that the project did not comply with the minimum plot size condition. Consequently, the claim for deduction under section 80-IB was deemed inadmissible, and the decision of the CIT(A) was upheld.