2015 (12) TMI 564 - AT - Income Tax

Deduction u/s 80IB - CIT(A) allowed the claim - DR relied on the orders of AO and contends that ld. CIT(A) has failed to appreciate that assessee cannot be regarded as a developer of the impugned housing projects in terms of sec. 80IB (10) - Held that - If the development plans and other approvals are in the name of assessee, its claim for deduction u/s 80(IB) cannot be denied on the basis that some other agency was involved in construction. This is quite understandable as for all practical purposes, the assessee retains the status of a developer of housing project in the record of JDA, other concerned regulatory laws and agencies of govt. related to housing and urban development and IT department takes a view which is at variance with concerned govt. departments. This leads to an anomalous situation of contradiction amongst the govt. departments, which has been duly addressed by Hon ble Karnataka High Court in Shravanee Construction 2012 (7) TMI 88 - KARNATAKA HIGH COURT . Respectfully following these judgments which are on similar facts, we are inclined to hold that assessee is eligible for claim u/s 80 (IB)(10). - Decided in favour of assessee

Summary

Issues Involved:
1. Allowability of deduction under Section 80IB of the Income Tax Act.
2. Determination of the developer status of the assessee.
3. Requirement of completion certificate for claiming deduction under Section 80IB(10).

Issue-wise Detailed Analysis:

1. Allowability of Deduction under Section 80IB of the Income Tax Act:
The primary issue was whether the assessee, who entered into a development agreement as the landowner, was eligible for deduction under Section 80IB(10) of the Income Tax Act. The department contended that the deduction is allowable only to an undertaking involved in the business of developing and building housing projects, not to an individual landowner. The assessee argued that he had undertaken the activity of building and developing a housing project and complied with all conditions laid down under the said provision, thus entitled to the deduction.

2. Determination of the Developer Status of the Assessee:
The assessee had inherited land, converted it from agricultural to industrial use, and later to residential use. He entered into a joint development agreement with M/s Unique Builders & Developers (Reality) (UDB) for constructing a housing project. The assessee claimed deduction under Section 80IB(10) for the profits derived from the sale of flats. The Assessing Officer (AO) denied the deduction, arguing that the assessee was not a developer since he did not incur construction expenses or control the project. The CIT(A) allowed the deduction, stating that the assessee was an integral part of the development process, contributing land, obtaining necessary approvals, and supervising the project. The ITAT upheld the CIT(A)'s decision, emphasizing that the assessee's involvement in the development process and the joint supervision agreement with UDB qualified him as a developer.

3. Requirement of Completion Certificate for Claiming Deduction under Section 80IB(10):
The AO also denied the deduction for the assessment year 2009-10 on the grounds that the assessee did not furnish a completion certificate from the local authority. The CIT(A) noted that the project was recognized as complete by the registration of sale deeds and that the delay in obtaining the official completion certificate should not penalize the assessee. The ITAT agreed, citing judicial precedents that the completion certificate is not crucial if the project is completed within the prescribed time, and any delay by the authorities in issuing the certificate should not affect the assessee's claim.

Conclusion:
The ITAT upheld the CIT(A)'s decision, allowing the assessee's claim for deduction under Section 80IB(10) for the respective years. The tribunal recognized the assessee's role as a developer and dismissed the revenue's appeals, emphasizing that the legislative intent of Section 80IB(10) is to promote housing development, and the assessee's compliance with the necessary conditions qualified him for the deduction. The tribunal also dismissed the assessee's cross-objection as academic.