2022 (5) TMI 626 - AT - Income Tax

Disallowance of deduction claimed u/s. 80-IB(10) - AO denied the exemption u/s 80IB(10) only on the ground that the plot of land on which the housing project was constructed is less than the prescribed limit of area i.e. 1 acre - AO came to the conclusion that the area of land is less than 1 acre based on the report submitted by the Government Registered Valuer as well as sanction of plan by the Town Planning Department - HELD THAT - The contention of the appellant that the he had purchased the land subsequent to the sanction of plan by Town Planning Department to adapt to the area of plot is rejected by the Government Registered Valuer on the ground that it is only purchase of right to access not purchase of land, this remain un-controverted by the assessee. Departmental Valuer also mentioned in the report that 7/12 extracts were not produced and the report submitted by the Department clearly mentioned that even on actual measurement the area of land is only 4000 sq.mtrs. which is less than 1 acre. It is not the case of the appellant that the report of the valuer as relied upon by the Department without giving an opportunity of hearing. Thus, the appellant had failed to prove that the area of land is more than 1 acre which is a condition precedent for availing the benefits of deduction u/s 80IB(10) of the Act. In the circumstances, we do not find any merit in the appeal filed by the assessee. Accordingly, the grounds of appeal filed by the assessee stand dismissed.

Summary

Issues:
Appeal against disallowance of deduction under section 80-IB(10) of the Income Tax Act for the assessment year 2010-11.

Analysis:
The appellant challenged the disallowance of deduction under section 80-IB(10) of the Income Tax Act for the assessment year 2010-11. The Assessing Officer disallowed the claim on the basis that the land area of the housing project was less than 1 acre, relying on the report of a Government Registered Valuer and permission from the Gram Panchayat. The appellant contended that the land area exceeded 1 acre, supported by the sanctioned plan of the Gram Panchayat and 7/12 extracts. Additionally, the Town Planning Authority certified the area to be more than 1 acre. The appellant also argued that the valuer and the Assessing Officer failed to consider the land area of an access road purchased subsequently. The appellant further disputed the preference given to the Town Planning Authority's order over that of the Gram Panchayat.

Upon appeal, the Commissioner of Income Tax (Appeals) upheld the disallowance, emphasizing that the area of land for the project was less than 1 acre, regardless of subsequent land purchases. The Commissioner considered the initial land area at the time of seeking permission from the Gram Panchayat as the determining factor. The appellant contested this decision, highlighting discrepancies in the assessment of land area and the failure to account for the access road's land area.

During the hearing, despite the appellant's absence, written submissions were considered. The issue revolved around the eligibility for deduction under section 80IB(10) of the Act. The Assessing Officer's denial of the exemption was based on the perceived land area being less than 1 acre, supported by the valuer's report and Town Planning Department's plan sanction. The appellant's argument of subsequent land purchase to meet the area requirement was refuted by the valuer. The Departmental Valuer's report indicated a land area of 4000 sq. mtrs., falling short of 1 acre. The appellant failed to substantiate the claim of exceeding 1 acre, crucial for availing the deduction. Consequently, the appeal was dismissed for lack of merit.

In conclusion, the appeal against the disallowance of deduction under section 80-IB(10) for the assessment year 2010-11 was dismissed due to the failure to establish the land area exceeding 1 acre, a prerequisite for claiming the deduction.