2021 (11) TMI 534 - HC - Income Tax

Deduction u/s 80IB(10) - Mandation of housing project should be on a plot of land which has a minimum area of 1 acre - Denial of deduction as four housing projects sanctioned by the Mangaluru City Municipal Corporation in the individual name of partners in a size of a plot of land which is more than one acre - tribunal as relying on case of Vandana Properties 2012 (4) TMI 54 - BOMBAY HIGH COURT has held that as long as housing projects are approved by the local authorities, on a plot of land having minimum of one acre, irrespective of the number of housing projects, the assessee is entitled for deduction under Section 80IB (10) of the Act. - HELD THAT - This ruling of Hon ble High Court of Mumbai is squarely applicable to the facts of the present case. We concur with the said ruling. In the case of Dilip Kumar Company 2018 (7) TMI 1826 - SUPREME COURT referred to by the learned counsel for the revenue, the Hon ble Apex Court has considered the exemption notification and in that context, it has been held that exemption notification should be interpreted strictly and the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption notification. With great respect, this finding of the Hon ble Apex Court would not come to the aid of the revenue to deny the deduction under Section 80IB(10) of the Act for the reasons that four projects of the assessee firm are sanctioned by the local authority in more than one acre. The reading of the provision by the revenue has misdirected itself in giving the narrow meaning to the provision which otherwise would render the provision otiose or redundant. No substantial question of law would arise for consideration, when the matter is adjudicated on the factual aspects which would contain the characteristic of a pure question of facts rather any question of law much less the substantial question of law.

Summary

Issues involved:
- Interpretation of Section 80IB(10) of the Income Tax Act, 1961
- Eligibility for deduction under Section 80IB(10) for housing projects on land less than one acre
- Application of legal precedents in determining eligibility for tax deduction

Detailed Analysis:
1. The judgment by the Karnataka High Court pertains to an appeal filed by the Revenue under Section 260-A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal related to the Assessment Year 2011-2012. The main issue raised was whether the Tribunal was correct in allowing a deduction under Section 80IB(10) despite a violation of the condition that the housing project should be on a plot of land with a minimum area of one acre. The appellant argued that strict compliance with the conditions of the provision is necessary for claiming the deduction, citing relevant legal judgments to support their position.

2. The assessee, a partnership firm engaged in real estate development, had its deduction under Section 80IB(10) disallowed by the Assessing Officer. However, the Commissioner of Income Tax (Appeals) and the Tribunal later allowed the deduction, leading to the Revenue's appeal. The dispute centered around whether the housing projects sanctioned by the local authority on a plot of land exceeding one acre met the requirements for claiming the deduction under Section 80IB(10).

3. The Tribunal, relying on a judgment of the Mumbai High Court in a similar case, held that as long as housing projects are approved by local authorities on a plot of land with a minimum of one acre, the assessee is entitled to the deduction under Section 80IB(10). The Tribunal's decision was supported by the Mumbai High Court's ruling, emphasizing that the size of the plot of land does not limit the number of housing projects that can qualify for the deduction, as long as they meet the specified conditions.

4. The High Court concurred with the Tribunal's decision, stating that no substantial question of law arose for consideration as the matter primarily involved factual aspects rather than legal interpretations. The Court highlighted that the Revenue's narrow interpretation of the provision would render it redundant and that the assessee's projects, sanctioned on land exceeding one acre, were eligible for the deduction under Section 80IB(10). Therefore, the Court dismissed the appeal in favor of the assessee.

5. In conclusion, the High Court's judgment upheld the Tribunal's decision, emphasizing that the size of the plot of land should not restrict the eligibility for the deduction under Section 80IB(10) as long as the housing projects meet the specified conditions, even if multiple projects are developed on the same plot of land exceeding one acre. The legal precedents cited supported the interpretation that the provision should not be narrowly construed to deny legitimate deductions for qualifying projects.