I-T - No deduction u/s 80IB(10) is allowable, when area of housing project falls short of minimum requirement of one acre
By TIOL News Service
ALLAHABAD, APRIL 20, 2017: THE ISSUE IS - Whether assessee would be entitled to a deduction u/s 80IB(10) when area of the housing project of assessee falls short of minimum requirement of one acre. NO is the verdict.
Facts of the case:
The assessee is engaged in the business of construction. It is claimed to have undertaken promotion and development of residential housing project named as "Fortuna Apartment" on three contiguous plots of land. Plan of the project was approved by Lucknow Development Authority on 22.6.03. For AY 2005-06, Asseessee filed return and claimed deduction u/s 80IB (10). AO disallowed deduction claimed by u/s 80IB (10). Assessee preferred appeal before CIT(A) who allowed the appeal. Revenue carried the matter in appeal before Tribunal, who, upheld the view taken by CIT (A). This has been challenged, pointing out that first approval was granted by LDA to the building plan of housing project of Assessee, when total area, as on spot, was only 2657 sq. mts. which was less than one acre. Hence mandatory condition of specification of one acre u/s 80IB (10) was not satisfied.
On appeal, the HC held that,
++ one of the essential conditions to attract deduction u/s 80IB (10) is that the housing project approved by local authority must be on the size of a plot of land which has a minimum area of one acre. The area of land for which housing project was approved by LDA on 24.11.2001 was only 2657 sq. mtrs. Rest of land became available to Assessee on and after 15.4.2002 and 14.10.2003, therefore, approval granted by LDA on 24.11.2001 cannot be deemed to be applicable to those plots which became available to Assessee much subsequently. And even second approval when granted on 22.6.2003, total area of 2 plots was only 2657 sq. mtrs. and 52.44 sq. mtrs. which was again less than one acre. Therefore, the Assessee did not satisfy the requirement of area of plot of land being minimum one acre, for purpose of deduction u/s 80IB.