2023 (2) TMI 353 - AT - Income Tax

Deduction u/s 80IB(10) - date of approval of original building plan - Claim denied as date of completion of the housing project is 23.03.2010, which is beyond the prescribed time lime for completion of the housing project under the provisions of section 80IB(10) - HELD THAT - As onus of satisfying the conditions precedent for availing the benefit of deduction u/s 80IB always lie upon an assessee, who is claiming the benefit of deduction. In the present case, as stated by us supra, the assessee had failed to prove that the permissions for construction of the housing project were obtained on 12.09.2005 for the first time except harping on that the permissions for obtain for the first time only on 12.09.2005. As observed even the permissions obtained on 12.09.2005 contained a reference to the original permission obtained on 01.07.2003, which clearly establishes that the approvals for building permission were obtained for first time only on 01.07.2003. The reliance placed by the ld. CIT(A) on the decision of CIT vs. Vandana Properties, 2012 (4) TMI 54 - BOMBAY HIGH COURT and the decision of Voora Properties (P) Ltd. 2015 (3) TMI 456 - MADRAS HIGH COURT is misplaced, inasmuch as, the ratio laid down in those cases has no application to the facts of the present case. We are of the considered opinion that the assessee is not eligible for deduction of profits derived from execution of housing projects Ruby and Emerald u/s 80IB(10) of the Act. We consider unnecessary to delve into the issue of violation of other conditions for availing the benefit of deduction u/s 80IB(10) of the Act. Since, we held in foregoing paragraphs that the respondent-assessee is not eligible for benefit of deduction u/s 80IB(10) for failure of assessee to satisfy the condition precedent. Appeal filed by the Revenue stands allowed.

Summary

Issues:
1. Date of approval for housing project commencement.
2. Eligibility for deduction under section 80IB(10) of the Income Tax Act.
3. Interpretation of building plan approval dates.

Issue 1: Date of approval for housing project commencement

The appeal by the Revenue challenges the order of the Commissioner of Income Tax (Appeals) regarding the commencement date of a housing project for the assessment year 2010-11. The Revenue contests the correctness of considering the amended approval date by the local authority in 2005 as the project commencement date, instead of the original layout plan sanction in 2003. The Revenue argues that the project completion in 2010 exceeds the prescribed timeline for deduction under section 80IB(10) of the Act. The Tribunal found that the original housing plan was sanctioned in 2003, requiring completion by 2008, rendering the assessee ineligible for the deduction due to non-compliance with statutory conditions.

Issue 2: Eligibility for deduction under section 80IB(10) of the Income Tax Act

The Respondent, a firm engaged in real estate development, claimed a deduction under section 80IB(10) for two housing projects. The Assessing Officer disallowed the claim, citing non-compliance with project completion timelines and unit size restrictions. The Commissioner of Income Tax (Appeals) allowed the deduction, emphasizing the revised plan approval date in 2005. However, the Tribunal reversed this decision, holding that the assessee failed to meet the conditions precedent for availing the deduction, as the original approval date in 2003 was crucial for compliance.

Issue 3: Interpretation of building plan approval dates

The Tribunal analyzed the significance of building plan approval dates in determining project commencement and eligibility for deductions under section 80IB(10). The Tribunal emphasized that the onus lies on the assessee to prove compliance with statutory conditions. Despite the Commissioner's reliance on certain court decisions, the Tribunal concluded that the assessee's failure to establish the 2005 approval as the first one, as the 2003 approval was referenced in subsequent documents, rendered them ineligible for the deduction. The Tribunal reversed the Commissioner's decision, emphasizing strict compliance with statutory conditions for availing tax benefits.

This detailed analysis of the judgment provides insights into the legal intricacies surrounding the issues raised in the appeal, focusing on the interpretation of statutory provisions and compliance requirements under the Income Tax Act.