2020 (7) TMI 400 - HC - Income Tax

Deduction u/s 80IB(10) - Whether ITAT is correct allowing claim to assessee land owner when it had not incurred any expenses towards development or construction of the housing project ? - HELD THAT - As relying on M/S. BASHYAM CONSTRUCTIONS P LTD. 2019 (2) TMI 906 - MADRAS HIGH COURT , SANGHVI AND DOSHI ENTERPRISE 2012 (12) TMI 84 - MADRAS HIGH COURT , RADHE DEVELOPERS 2011 (12) TMI 248 - GUJARAT HIGH COURT , M/S VEENA DEVELOPERS 2015 (5) TMI 193 - SUPREME COURT Tribunal merely stated that no expenses were recorded in the P L account. Therefore, the contention advanced by the Revenue in this regard is not tenable. That apart, a plain reading of Section 80IB(10) of the Act evidently makes it clear that deduction is available in a case where an undertaking develops and builds a housing project. The Section clearly draws the distinction between 'developing' and 'building'. In the preceding paragraphs, we have noted the factual position as could be culled out from the joint venture agreement, which clearly shows that the assessee is the developer and M/s.ETA is the builder and mutual rights and obligations are inextricably linked with each other and undoubtedly, the project is a housing project thereby, the assessee would be entitled to claim deduction under Section 80IB (10) - Decided against revenue.

Summary

Issues:
Appeal by Revenue under Section 260A of the Income Tax Act against a common order related to deduction under Section 80IB(10) for assessment years 2008-09 and 2010-11.

Analysis:
The High Court of Madras heard the appeals by the Revenue against a common order dated 27.12.2017 made by the Income Tax Appellate Tribunal, Chennai. The substantial question of law in question was whether the Tribunal was correct in directing the Assessing Officer to allow deduction under Section 80IB(10) to the assessee landowner despite not incurring expenses towards development or construction of the housing project. The Tribunal remanded the matter to the Assessing Officer for fresh consideration with specific directions regarding the deduction. The Court noted that the Tribunal's direction should not aggrieve the Revenue. The Court referred to a previous Division Bench judgment in a similar case and various decisions by different courts to support its decision.

The Court emphasized that ownership is not the sole criteria for granting deduction under Section 80IB(10), especially in cases of development where the developer is entitled to claim deduction. The Court highlighted that the Revenue's reverse stand on this issue was not tenable, as the Act clearly distinguishes between 'developing' and 'building'. The Court concluded that the assessee, being the developer in a joint venture agreement, was entitled to claim the deduction under Section 80IB(10) for a housing project.

Based on the above analysis and precedent, the Court answered the substantial question of law framed in the appeals against the Revenue. The Court dismissed the tax case appeals, confirming the Tribunal's orders of remand and directing the Assessing Officer to follow the Tribunal's directions. No costs were awarded in the case, and the connected CMP was also dismissed.