2016 (11) TMI 1146 - AT - Income Tax

Disallowance of claim made u/s 80IB - Held that - As in the case of assessee for Asst. Year 2004-05, we observe that the assessee should be allowed deduction u/s 80IB(10) even when the assessee is not the owner of the land but owns rights and responsibilities with the land owner puts the assessee as de facto owner of the land and development of the project is not merely of works contractors.

Summary

Issues:
1. Legality of assessment order passed under section 143(3) read with section 254 of the Income Tax Act.
2. Disallowance of claim made under section 80IB of the Income Tax Act.
3. Interpretation of conditions under section 80IB(10) of the Income Tax Act regarding ownership of land for claiming deduction.
4. Consideration of explanations and evidence furnished by the appellant.
5. Application of section 263 of the Income Tax Act.
6. Admissibility of deduction under section 80IB(10) of the Income Tax Act.

Analysis:
1. The appellant challenged the legality of the assessment order passed under section 143(3) read with section 254 of the Income Tax Act, claiming it to be illegal, unlawful, and against natural justice. The appellant argued that the order was erroneous and prejudicial to their interests. The Tribunal considered previous decisions in the appellant's own case and found that the order was legally correct, thus rejecting the appellant's contentions.

2. The dispute revolved around the disallowance of a claim made under section 80IB of the Income Tax Act amounting to ?36,08,678. The appellant contended that the construction of residential units in the housing project fulfilled the conditions of section 80IB(10) of the Act. The Tribunal examined relevant case laws and found in favor of the appellant, allowing the deduction under section 80IB(10) of the Act.

3. The interpretation of conditions under section 80IB(10) of the Income Tax Act regarding ownership of land for claiming deduction was a crucial issue. The Tribunal analyzed agreements and development rights held by the appellant, concluding that even without formal ownership, the appellant had de facto ownership of the land, making them eligible for the deduction under section 80IB(10).

4. The appellant argued that the explanations and evidence provided were not fully considered by the authorities. However, the Tribunal found that the appellant's contentions were adequately addressed and supported by legal precedents, leading to a favorable decision for the appellant.

5. The application of section 263 of the Income Tax Act was raised, questioning the correctness of invoking such powers. The Tribunal reviewed past decisions and determined that the invocation of section 263 was not warranted in this case, as the assessment was found to be legally correct.

6. The issue of the admissibility of deduction under section 80IB(10) of the Income Tax Act was resolved in favor of the appellant based on the interpretation of ownership rights and responsibilities in development projects. The Tribunal upheld the appellant's claim for deduction under section 80IB(10) amounting to ?36,08,678, emphasizing the de facto ownership status held by the appellant.