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2016 (10) TMI 923 - AT - Income TaxEligibility of deduction under section 80IB(10) - requirement of ownership of the land to qualify for deduction u/s 80IB(10) - Held that - As decided in in the case of CIT Vs. Radhe Developers 2011 (12) TMI 248 - GUJARAT HIGH COURT for developing housing project it is not necessary that the assessee to be owner of the land. Similarly it was not necessary that approval should be in the name of assessee. If assessee has borne risk and reward of the contract then it will be a project of the assessee. We find that ld.AO in the reasons extracted supra has primarily rejected the claim of the assessee that it was not owner of the land and it has not conceptualized the projects. Both these conditions have been considered by the Hon ble Court and decided against the Revenue. Therefore in our opinion the issue on merit is directly covered by the decision of the Hon ble High Court and the assessee is entitled for deduction under section 80IB(10) of the Act. We allow appeal of the assessee and direct the AO to grant deduction under section 80IB(10) of the Act. - Decided in favour of assessee
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Eligibility for deduction under section 80IB(10) of the Income Tax Act, 1961. 3. Ownership and approval requirements for claiming deduction under section 80IB(10). 4. Compliance with conditions stipulated in section 80IB(10), including built-up area and construction of shops. Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The appeal was time-barred by 971 days. The assessee filed an application under sub-section 5 of section 253 supported by an affidavit explaining the delay. The affidavit stated that the delay occurred due to the accountant's failure to communicate the order of the CIT(A) to the partners and the tax consultant's failure to inform the assessee directly. The Tribunal directed the Revenue to submit evidence regarding the service of the CIT(A)’s order, which showed that the order was served on the assessee's tax consultant. The Tribunal considered the explanation and supporting documents, including salary registers and income-tax returns of the accountant, and concluded that the delay was due to a bona fide mistake and human error. The Tribunal condoned the delay, citing legal precedents that emphasize a liberal interpretation of "sufficient cause" to advance substantial justice. 2. Eligibility for Deduction Under Section 80IB(10): The assessee claimed a deduction of ?1,03,17,545/- under section 80IB(10) for the development and construction of residential housing projects. The AO disallowed the claim, arguing that the assessee was not the owner of the land and acted merely as a contractor. The CIT(A) upheld this disallowance, citing that the built-up area of the shops exceeded the permissible limit under section 80IB(10)(d). However, the Tribunal found that the shops were constructed in a different project (Nandi Park Co-op. Housing Society Ltd.), not in the projects for which the deduction was claimed (Nandi Vihar and Nandi Villa Co-op. Housing Societies). Therefore, the Tribunal concluded that the CIT(A) had factually erred. 3. Ownership and Approval Requirements: The AO and CIT(A) contended that the deduction under section 80IB(10) was not allowable because the assessee was not the owner of the land and the project approval was not in the assessee’s name. The Tribunal referred to the jurisdictional High Court’s decision in CIT Vs. Radhe Developers, which held that ownership of the land and approval in the assessee’s name are not necessary for claiming the deduction. The key factor is whether the assessee bore the risk and rewards of the project. The Tribunal found that the assessee met this criterion and was therefore eligible for the deduction. 4. Compliance with Conditions in Section 80IB(10): The CIT(A) disallowed the deduction on the grounds that the built-up area of the shops exceeded the limit specified in section 80IB(10)(d). The Tribunal found that the shops were part of a different project and not the ones for which the deduction was claimed. The Tribunal noted that the AO and CIT(A) did not raise objections regarding other conditions, such as the size of the residential units and the completion date of the project. Based on these findings and the High Court’s ruling, the Tribunal concluded that the assessee complied with the conditions of section 80IB(10) and was entitled to the deduction. Conclusion: The Tribunal allowed the appeal, condoned the delay in filing, and directed the AO to grant the deduction under section 80IB(10) of the Income Tax Act, 1961. The decision was based on the assessee's compliance with the conditions of section 80IB(10) and the interpretation of the law by the jurisdictional High Court. The order was pronounced on 7th October 2016 at Ahmedabad.
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