2020 (4) TMI 647 - AT - Income Tax

Addition u/s 80IB(10) - CIT(A) deleting the addition holding that the housing project of the assessee was approved by the Collector Pune not as local authority defined u/s. 3(31) o the General Clauses Act? - HELD THAT - Relevant Gat Numbers falls in an area controlled under Maharashtra Land Revenue Code and Maharashtra Regional Town Planning Act (MRTP), 1966. The Collector has given approval of the permission to convert the land to non-agricultural purpose. He also issued the permission to construct of residential houses and the said property located at above cited Gat Numbers. While granting the permission, the Collector mentioned the terms and conditions in his permission letter from 1 to 33 where the conditions specify the manner of construction of the building, post-construction of the building, obtaining of the completion certificate etc. Considering the above finding of the CIT(A) on the issue of allowing of deduction u/s 80IB(10) we are of the opinion that the order of the CIT(A) is fair and reasonable and it does not call for any interference. Thus, the ground raised by the Revenue is dismissed.

Summary

Issues:
1. Interpretation of Section 80IB(10) of the Income Tax Act, 1961 regarding approval for housing projects.

Analysis:

The appeal before the Appellate Tribunal ITAT Pune concerned the interpretation of Section 80IB(10) of the Income Tax Act, 1961 regarding the approval required for housing projects. The assessee, a partnership firm engaged in Real Estate Development, developed a housing project named "Konark Exotica" in Pune and claimed a deduction of ?12,40,34,451 under Section 80IB(10) after obtaining approval from the District Collector. The Assessing Officer disallowed the deduction stating that the approval should have been granted by a "Local Authority" and not the District Collector.

During the first appellate proceedings, the CIT(A) considered the submission of the assessee and relied on a judgment of the Jurisdictional High Court to grant the deduction claimed under Section 80IB(10). The CIT(A) held that the approval granted by the Collector should be considered as approval by a "Local Authority" as per the provisions of Section 80IB(10) based on the MRTP Act.

The Appellate Tribunal, after hearing arguments from both sides, upheld the decision of the CIT(A) to allow the deduction under Section 80IB(10). The Tribunal found that the Collector's approval fell within the definition of a "Local Authority" as per the relevant legal provisions and upheld the CIT(A)'s decision based on the High Court judgment and the specific conditions mentioned in the approval letter issued by the Collector.

In conclusion, the Appellate Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to allow the deduction under Section 80IB(10) for the housing project developed by the assessee. The Tribunal found the CIT(A)'s order fair and reasonable, stating that it did not warrant any interference, and upheld the decision in favor of the assessee.