Whether when a project fulfils criteria for being approved as housing project, in that case, deduction u/s 80IB(10) cannot be denied, merely on basis that assessee had obtained separate plan permits for various blocks - YES: HC

THE issue before the Bench is - Whether when a project fulfils criteria for being approved as housing project, in that case, deduction u/s 80IB(10) cannot be denied, merely on basis that assessee had obtained separate plan permits for various housing blocks. And the verdict goes against the Revenue.

Facts of the case

The assessee is a company engaged in the business of construction and sale of residential flats. It owns a land measuring 1.065 acres in Chennai. The assessee developed a residential project on the said land and within the project the assessee constructed six housing towers, which were approved by the CMDA by six separate permits. For the relevant AY, assessee had filed its return of income admitting nil income after claiming deduction u/s 80IB(10). The case of the assessee was selected under CASS and notice u/s 143(2) was issued. In scrutiny assessment u/s 143(3), AO allowed the claim of the assessee u/s 80IB(10). However, CIT(A) passed an order u/s 263 holding that the assessee did not comply with the provisions of Section 80IB(10) and remitted the matter to AO to examine the claim of deduction u/s 80IB(10) afresh. Accordingly, the AO passed an order u/s 143(3) read with Section 263 holding that the assessee had developed six separate projects in one single piece of land and the assessee did not fulfill the essential condition of minimum area of one acre for a single project as laid down u/s 80IB(10). Consequently, AO disallowed the deduction granted earlier to the assessee. On appeal, CIT(A) upheld the findings of the AO and dismissed the assessee's contentions. On further appeal, Tribunal held that the assessee had developed a project in a land measuring 1 acre and 6.5 cents and allotted 1022 sq.ft. of undivided share of land to each of the 48 allottees and hence, it was entitled to the benefit of Section 80IB(10) as a composite scheme. Thus, Tribunal held that the assessee is eligible to claim deduction u/s 80IB(10).

Held that,

++ we find, on facts, there appears to be no dispute or confusion, except the plea of the Department that the assessee did not fulfill the requirements prescribed under Section 80IB(10) of the Income Tax Act . On facts, we find that there is no dispute in the approval granted by the CMDA in respect of the composite housing scheme. When the Legislature introduced 100% deduction under the Income Tax Act, it was known that the local authorities could approve a housing project to the extent permitted under the Development Control Rules. When the project fulfils the criteria for being approved as a housing project, then, deductions cannot be denied u/s 80IB(10), merely because the assessee had obtained separate plan permits for the six blocks. If the conditions specified under Section 80-IB are satisfied, then deduction is allowable on the entire project. Since the project was approved in accordance with Development Control Rules, the assessee would be entitled to 100% deduction on the entire project approved by the Local Authority. The above-said view was fortified by this Court in an identical circumstance in the decision reported in (2012) 83 CCH 267 ChenHC (Commissioner of Income Tax V. Shantiniketan Property Foundation (P) Limited, wherein, HC held that the present assessee's stand is on a better footing than that of the decision of the Bombay HC. The facts in the decision of the Bombay High Court related to the case of the assessee putting up extra blocks in the land, where there were already five buildings. As far as the order passed by us in T.C.Nos.1014 of 2009, 857 of 2010 and 190 to 192 of 2012 and W.A.No.471 of 2010 VISWAS PROMOTERS PRIVATE LIMITED V. THE ACIT dated 2.11.2012 = 2012-TIOL-948-HC-MAD-IT, is concerned, as in the present case, several blocks were put up in a larger area which admittedly exceed the required area specified in Clause (a) sub section 10 of Section 80-IB viz., one acre. Thus, applying the decision of HC rendered in T.C.Nos.1014 of 2009, 857 of 2010 and 190 to 192 of 2012 and W.A.No.471 of 2010 VISWAS PROMOTERS PRIVATE LIMITED V. THE ACIT dated 2.11.2012 = 2012-TIOL-948-HC-MAD-IT, we have no hesitation in rejecting the Revenue's appeal, thereby confirm the order of the Tribunal. The above-said decision of this Court squarely applies to the facts of the present case. In the present case also, the assessee constructed six blocks in a land measuring one acre and 6.5 cents which admittedly exceed the required area specified in Clause (a) sub section 10 of Section 80-IB viz., one acre. Accordingly