2015 (3) TMI 190 - AT - Income Tax

Deduction under Section 80-IB(10) - disallowance on the ground, that the assessee has obtained 6 planning permits for construction of 6 blocks (treated as 6 projects by Revenue) on a land measuring little over one acre - Held that - The Hon'ble Bombay High Court in the case of Vandana Properties (2012 (4) TMI 54 - BOMBAY HIGH COURT ) while dealing with similar controversy has held that all the approved housing projects on the same land are eligible for claiming deduction under Section 80-IB(10), if otherwise they fulfill the conditions set out under Section 80-IB(10). plain reading of Section 80IB (10) does not even remotely suggest that the plot of land having minimum area of one acre must be vacant. The said Section allows deduction to a housing project (subject to fulfilling all other conditions) constructed on a plot of land having minimum area of one acre and it is immaterial as to whether any other housing projects are existing on the said plot of land or not. In these circumstances, construing the provisions of Section 80IB (10) by adding words to the statute is wholly unwarranted and such a construction which defeats the object with which the Section was enacted must be rejected. Thus we hold that the assessee is eligible to claim deduction under Section 80-IB(10) in respect of its project Voora Prithvi situated at Kamaraj Salai, Kottivakkam. - Decided in favour of assessee.

Summary

Issues:
Disallowance of deduction under Section 80-IB(10) due to separate permits for construction of 6 blocks on a single acre of land.

Analysis:
The appeal was filed against the order disallowing deduction under Section 80-IB(10) for constructing 6 blocks on a land measuring slightly over one acre. The assessee, a construction company, claimed the deduction for the assessment year 2007-08. The Commissioner of Income Tax and the Assessing Officer held that the 6 blocks constituted separate projects, rendering the assessee ineligible for the deduction. The CIT(Appeals) upheld this decision, leading to the appeal before the Tribunal.

The assessee argued that all 6 blocks were part of a single housing project named "Voora Prithvi," with each allottee receiving an undivided share of the total land. The permits for the blocks were granted on the same day, indicating a composite housing scheme. The assessee relied on a Bombay High Court judgment to support their claim that multiple projects on the same land are eligible for the deduction under Section 80-IB(10), provided they meet the specified conditions.

The Department contended that the separate permits for the blocks indicated distinct projects on the land, unlike the Mumbai scenario, where land scarcity justified a different interpretation. The Tribunal examined the records, sale deed, and the Bombay High Court judgment cited by the assessee. It noted that the Revenue did not dispute the land size requirement under Section 80-IB(10) and found merit in the assessee's argument that all 6 blocks were part of a single project, as evidenced by the allottees' undivided shares and simultaneous construction.

Citing the Bombay High Court's decision, the Tribunal emphasized that the intention behind Section 80-IB(10) was to promote housing projects for lower and middle-income groups. The Court clarified that the size of the plot of land did not mandate it to be vacant, allowing for multiple projects on the same land to qualify for the deduction, subject to meeting statutory conditions. Therefore, the Tribunal held that the assessee was eligible for the deduction under Section 80-IB(10) for the "Voora Prithvi" project, overturning the lower authorities' decisions.

In conclusion, the Tribunal allowed the appeal, emphasizing the eligibility of the assessee to claim the deduction under Section 80-IB(10) for the composite housing project, despite the separate permits for the 6 blocks on the single acre of land.