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2021 (2) TMI 80 - AT - Income TaxEligible for deduction u/s 80IB(10) - total area of the land on which the project was undertaken is only 40 ares or 4000 sq.mtrs. which is just less than the one acre of land - AO denied deduction u/s 80IB(10) for the reason that the appellant firm had not satisfied one of the conditions to be eligible for claiming deduction i.e. the project should be under the size of plot of land with minimum area of one acre - HELD THAT - For the present, it is sufficient to refer to those observations for the limited purpose saying that the actual area is 4722.45 sq.mtrs. which is available with the appellant for the purpose of housing project. It is also part of record that the Pune Municipal Corporation had sanctioned the housing project with reference to the 4722.45 sq.mtrs. before leaving portion of land area for road widening. In support of this, the Architect s certificate who actually measured the land in the presence of the Assessing Officer. Assessing Officer placed heavily reliance on the copies of 7/12 extracts. Municipal Corporation had not come to the conclusion that the area of land on which the residential project was undertaken was less than one acre. It is settled proposition of law that the eligibility conditions of section 80IB(10) of the Act does not prescribe that a developer of the land i.e. need not be the owner of the land. Hon ble Gujarat High Court in the case of CIT vs. Radhe Developers 2011 (12) TMI 248 - GUJARAT HIGH COURT clearly held that for the purpose of claiming deduction u/s 80IB(10) of the Act, it is not necessary that the assessee should be owner of the land. It is neither for the Municipal Corporation nor for the Assessing Authority to look into the title of the property. There is no material on record to show that the land which is physically available in excess of the area mentioned in 7/12 extracts is claimed by any other third party nor is there any substituting the dispute in this regard. The requirement of the provisions of section 80IB(10) of the Act stands satisfied if the area on which the project was undertaken is one acre or more. It is not open to the Assessing Officer to act as an Arbitrator of land disputes. The concept of ownership of the land is alien to the provisions of section 80IB(10) of the Income Tax Act. Therefore, we do not see any reason for Assessing Officer to go into the issue of ownership at all. Assessing Officer had given finding of fact that the Municipal Authority had sanctioned the permissible area of construction with reference to the area of 4000 sq.mtrs. But the Assessing Officer had failed to take note of the fact that the application for grant of approval of the housing project was made by the appellant with reference to 4722.45 sq.mtrs. It is different matter that the municipal authority had determined the permissible area of the construction with reference to 4000 sq.mtrs. Nowhere, the municipal authorities have mentioned that the land of 4722.45 sq.mtrs. was not available. Even the land earmarked for the purpose of widening of the road forms part of the housing project as held by the Mumbai Bench of the Tribunal in the case of Vidhi Builders 2011 (4) TMI 1373 - ITAT MUMBAI and quoted with approval in the case of CIT vs. Brigade Enterprises Ltd. . 2020 (9) TMI 1137 - KARNATAKA HIGH COURT The Assessing Officer also lost sight of the settled position of law that any housing project which has been approved by the local authority as a housing project should be considered as appropriate housing project u/s 80IB(10) of the Act as held by the Hon ble Bombay High Court in the case of Vandana Properties 2012 (4) TMI 54 - BOMBAY HIGH COURT Either the Assessing Officer or the CIT(A) did not meet the contention of the appellant that 4000 sq.mtrs. with reference to which the permissible of construction area was granted by the municipal authorities is equivalent to one acre in metric system. Thus, there is no material on record to say that the area of land on which the housing project was taken up was less than one acre. The Assessing Officer merely went by the entries made in he 7/12 extracts which are in the nature of mutation entries made in the land records of the State Government. The mutation entries in the records of the State does not confer any title on the property. We dispel the reasoning of the lower authorities in denying the exemption u/s 80IB(10) of the Act. Accordingly, we set-aside the order of the lower authorities and direct the Assessing Officer to allow the deduction u/s 80IB(10) - Decided in favour of assessee.
Issues Involved:
1. Rejection of the assessee's claim under Section 80IB(10) of the Income Tax Act. 2. Exclusion of land area for road widening in calculating the total plot size. 3. Liability to interest under Section 234B. Detailed Analysis: 1. Rejection of the Assessee's Claim under Section 80IB(10): The appellant, a partnership firm engaged in development and construction, filed a return for the assessment year 2007-08, claiming a deduction under Section 80IB(10) of the Income Tax Act. The Assessing Officer (AO) disallowed this claim, arguing that the housing project did not meet the minimum land area requirement of one acre. The AO based this on the 7/12 extracts showing the land area as 4000 sq.mtrs., which is less than one acre. The appellant contended that the actual land area was 4722.45 sq.mtrs., as measured in the presence of the AO, and that the discrepancy was due to conversion factors in land measurement. The appellant also argued that the area earmarked for road widening should be included in the total plot size. The Tribunal noted that the actual area of 4722.45 sq.mtrs. was not disputed by the AO, who suggested that any excess area might be due to encroachment. The Tribunal emphasized that the eligibility for Section 80IB(10) does not require the developer to be the landowner, citing the Gujarat High Court's decision in CIT vs. Radhe Developers. The Tribunal concluded that the AO's reliance on 7/12 extracts was misplaced and that the actual area, including the portion for road widening, should be considered. The Tribunal directed the AO to allow the deduction under Section 80IB(10). 2. Exclusion of Land Area for Road Widening: The AO excluded 1508.49 sq.mtrs. earmarked for road widening from the total plot size, reducing the area to 4000 sq.mtrs. The appellant argued that this area should be included as it was part of the development rights and was considered for Floor Space Index (FSI) calculations. The Tribunal supported the appellant's view, referencing the Mumbai Tribunal's decision in Vidhi Builders vs. ITO and the Karnataka High Court's endorsement in CIT vs. Brigade Enterprises Ltd. The Tribunal held that the area for road widening forms part of the housing project and should be included in the total plot size. 3. Liability to Interest under Section 234B: The appellant denied liability to interest under Section 234B and contested the AO's decision to charge this interest. The Tribunal's detailed analysis focused primarily on the eligibility for Section 80IB(10) deductions and the inclusion of the road widening area. The Tribunal did not provide a separate, detailed analysis of the interest liability under Section 234B in the summarized judgment. Conclusion: The Tribunal allowed the appeal, directing the AO to grant the deduction under Section 80IB(10) and criticized the AO for making unfounded allegations about encroachment. The Tribunal emphasized the need for AOs to act judicially and adhere to principles of natural justice. The Tribunal's decision underscores the importance of considering actual land measurements and the inclusion of areas earmarked for public infrastructure in determining eligibility for tax deductions under Section 80IB(10).
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