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2023 (8) TMI 1185 - AT - Income TaxDeduction u/s. 80IB(10) - Claim denied on the ground that the housing projects were not completed by the assessee within five years period - HELD THAT - It is an admitted fact that separate building planning permission were obtained by assessee from Local Authority namely AMC for each Block as a separate housing project. Further Building Usage permission was also obtained by the assessee from the Local Authorities namely Ahmedabad Municipal Corporation well within the period of 2 to 5 years. The Lower Authorities without appreciating the above facts denied the claim of deduction u/s. 80IB(10), solely on the ground that the assessee has not started the building project relating to Block Nos. E, F G and thereby wrongly held that the assessee has not completed the housing projects. As decided in the case of Viswas Promoters (P.) Ltd. 2012 (11) TMI 1117 - MADRAS HIGH COURT held that each residential block is a housing project in itself for the purpose of claiming deduction u/s. 80IB(10). Also in the case of Vertex Homes (P.) Ltd. 2015 (9) TMI 549 - ITAT HYDERABAD held that the assessee, a builder, had not completed construction of all blocks of housing project, within stipulated period, would not deprive assessee from availing of deduction u/s. 80IB(10) in respect of each of completed block on stand alone basis. Thus separate planning permission obtained by the assessee for each Block separately and after construction obtained separate Building Usage permission from the Local Authority within 5 years period, therefore the assessee cannot be denied the claim of exemption u/s. 80IB(10) - Decided in favour of assessee.
Issues Involved:
1. Disallowance of labour expenses. 2. Denial of deduction under Section 80IB(10) of the Income Tax Act, 1961. Summary: 1. Disallowance of Labour Expenses: The Assessee raised a ground of appeal in ITA No. 1401/Ahd/2019 regarding the disallowance of labour expenses amounting to Rs. 25,68,507/-. However, the Assessee's counsel, Mr. Sudhir Mehta, stated that this ground was not being pressed. Consequently, the appeal on this ground was dismissed. 2. Denial of Deduction Under Section 80IB(10): The primary issue in ITA No. 1401/Ahd/2019 was the confirmation of an addition of Rs. 31,64,266/- due to the denial of deduction under Section 80IB(10) on the grounds that the housing projects were not completed within the stipulated five-year period. 2.1. Facts of the Case: The Assessee developed 11 Blocks of residential housing projects under the scheme of Takshashila Colonial, obtaining separate planning permissions and Building Usage permissions from the Ahmedabad Municipal Corporation (AMC) for 8 out of the 11 Blocks. The Assessing Officer (A.O.) held that the housing projects should have been completed within five years from the end of the financial year in which the project was approved. Since Blocks E, F, and G were not started, the A.O. issued a show cause notice and subsequently denied the deduction under Section 80IB(10). 2.2. Assessee's Argument: The Assessee argued that separate planning permissions were obtained for each Block, and only the completed Blocks (C, D, L, M, N, O, P, and Q) were claimed for deduction under Section 80IB(10). The Assessee cited the Hon'ble Madras High Court judgment in the case of Viswas Promoters (P.) Ltd. and the Hyderabad Tribunal decision in the case of Vertex Homes (P.) Ltd., asserting that each Block should be considered a separate housing project. 2.3. Tribunal's Decision: The Tribunal noted that separate building planning permissions and Building Usage permissions were obtained for each Block within the stipulated period. Following the judicial precedents, the Tribunal held that the Assessee cannot be denied the claim of deduction under Section 80IB(10) for the completed Blocks. The order of the Lower Authorities was set aside, and the A.O. was directed to allow the deduction amounting to Rs. 31,64,266/-. Conclusion: The appeal filed by the Assessee in ITA No. 1401/Ahd/2019 was allowed, granting the deduction under Section 80IB(10) for the completed Blocks. The disallowance of labour expenses was dismissed as the Assessee did not press this ground. The judgment was pronounced on 23-08-2023.
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