2017 (5) TMI 204 - AT - Income Tax

Claim of deduction under Section 80IB(10) - fulfillment of conditions - as per AO assessee was unable to get approval of the housing project by the Municipal Corporation as separate building plans for each of the units - Held that - As relying on in assessee s own case for AY 2011-12 and case of B.M. and Brothers 2013 (10) TMI 290 - GUJARAT HIGH COURT wherein observed that as the assessee has taken the approval in respect of the housing project more than once and it shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority and accordingly held that assessee was eligible to avail the claim of deduction under Section 80IB(10) of the Act. - Decided in favour of assessee

Summary

Issues Involved:
1. Deduction under Section 80IB(10) of the Income-tax Act, 1961.
2. Approval of the housing project by the Municipal Corporation.
3. Applicability of the judgment of the jurisdictional High Court in the case of B.M. and Brothers.
4. Consistency with the Co-ordinate Bench's decision in the assessee’s own case for AY 2011-12.

Detailed Analysis:

1. Deduction under Section 80IB(10) of the Income-tax Act, 1961:
The primary issue in this appeal revolves around the Revenue's grievance against the order of the Commissioner of Income-tax (Appeals) [CIT(A)], which allowed the assessee's claim of deduction under Section 80IB(10) amounting to ?53,43,074/-. The assessee, a partnership firm engaged in real estate and building construction, had filed a return of income for the Assessment Year (AY) 2010-11 showing nil income after claiming this deduction. The Assessing Officer (AO) denied the deduction on the grounds that the assessee failed to obtain approval for the housing project by the Municipal Corporation as separate building plans for each unit.

2. Approval of the housing project by the Municipal Corporation:
The AO's denial was based on the observation that the assessee did not get a single approval for the entire housing project but rather obtained multiple approvals for separate units. The AO interpreted Section 80IB(10) to mean that approval should be for the entire project and not in a piecemeal manner. However, the CIT(A) disagreed, stating that the approval in respect of the housing project, even if obtained more than once, should be deemed to have been approved on the date the building plan was first approved by the local authority.

3. Applicability of the judgment of the jurisdictional High Court in the case of B.M. and Brothers:
The CIT(A) relied on the judgment of the Hon’ble jurisdictional High Court in the case of B.M. and Brothers, which held that multiple approvals for a housing project do not disqualify the project from availing the deduction under Section 80IB(10). The CIT(A) observed that the assessee's project met all the conditions laid down under Section 80IB(10), including the approval date, project area, built-up area per unit, and completion date. The CIT(A) thus found the assessee eligible for the deduction.

4. Consistency with the Co-ordinate Bench's decision in the assessee’s own case for AY 2011-12:
The assessee's counsel argued that the issue was already covered by the Co-ordinate Bench's decision in the assessee's own case for AY 2011-12, where a similar appeal by the Revenue was dismissed. The Co-ordinate Bench had previously upheld the CIT(A)'s decision, which allowed the deduction under Section 80IB(10) based on similar facts and the same jurisdictional High Court judgment. The Departmental Representative acknowledged that the facts of the current appeal were indistinguishable from those in the previous year and conceded that the Special Leave Petition filed before the Hon’ble Supreme Court in the case of B.M. and Brothers had not reached finality.

Conclusion:
The Tribunal, after considering the rival contentions and reviewing the material on record, found no reason to interfere with the CIT(A)'s order. The Tribunal noted that the CIT(A) had correctly applied the jurisdictional High Court's judgment and the Co-ordinate Bench's decision in the assessee's own case for the preceding year. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order allowing the deduction under Section 80IB(10).

Order:
The appeal filed by the Revenue was dismissed, and the order was pronounced in the Court on 2nd May 2017 at Ahmedabad.