2019 (4) TMI 1385 - HC - Income Tax

Deduction u/s 80IB - assessee was awarded contract by the SRA under Slum Rehabilitation Programme for development of a plot of land - whether CBDT's Notification dated 05.01.2011 speaks of the SRA Scheme being eligible u/s. 80IB and not the contractor (the executor) who is clearly barred from the deduction u/s. 80IB ? - HELD THAT - Nothing contained in clauses (a) or (b) of Section 80IB(10) would apply to the housing project carried out in accordance with a scheme framed by the Central Government or a State Government for re construction or re development of existing building in areas, declared to be slum areas under any law for the time being in force and such scheme is notified by the board in this behalf. Thus, the schemes as duly notified by the board for redevelopment of slum areas, have been given special concession, given their special requirements. Once such a notification as referred to in the said proviso is issued by the CBDT, requirements of clauses (a) and (b) of Section 80IB(10) of the Act would not apply to such projects. In the present case, we may re call such notification has already been issued, covering all Slum Redevelopment Schemes prepared by the State of Maharashtra under the Maharashtra Redevelopment Town Planning Act. It was under such scheme that, the assessee had engaged itself in developing housing project. - Decided against revenue

Summary

Issues:
1. Allowance of deduction u/s. 80IB to the assessee for a housing development project.
2. Interpretation of the Explanation to section 80IB(10) of the Income Tax Act, 1961.
3. Comparison of the Tribunal's decision in the present case with a previous case.
4. Analysis of Section 80IB(10) of the Act and the proviso related to housing projects in slum areas.

The High Court of Bombay considered an appeal challenging the Income Tribunal's judgment regarding the deduction under Section 80IB(10) of the Income Tax Act, 1961. The core issue was whether the Tribunal was correct in allowing the deduction to the assessee for a housing development project awarded by the Slum Rehabilitation Authority (SRA). The Revenue contended that the contractor (assessee) was not eligible for the deduction u/s. 80IB as per the Explanation to section 80IB(10) of the Act. The Tribunal ruled in favor of the assessee, citing a similar case and the CBDT's notification of approved projects under the Slum Redevelopment Scheme.

The Court noted that the Tribunal's decision in a previous case involving transfer of development rights was upheld in an appeal by the Revenue. In the present case, the assessee was awarded a contract by the SRA under the Slum Rehabilitation Programme, indicating a stronger position for the assessee. The Court emphasized that Section 80IB(10) of the Act provides deductions for housing projects meeting specific criteria regarding project commencement, completion time frame, and minimum plot area. However, a proviso exempts projects under government schemes for slum redevelopment from these criteria upon notification by the CBDT. The Court confirmed that the notification for slum redevelopment schemes in Maharashtra had been issued, allowing the assessee's project to qualify for the deduction under Section 80IB(10) without any legal issues.

In conclusion, the High Court dismissed the appeal, affirming the Tribunal's decision to allow the deduction u/s. 80IB to the assessee for the housing development project in compliance with the provisions of the Income Tax Act and the CBDT's notification regarding slum redevelopment schemes. The Court clarified that the assessee's engagement in the project under the specified scheme made them eligible for the deduction, emphasizing the importance of adhering to the legal requirements and notifications for such specialized projects.