Assessee Entitled to Deduction Under Section 80IB(10) for Separate Project on One-Acre Plot; No Unit Size Breach

HC allowed the assessee's claim for deduction under s.80IB(10), rejecting Revenue's contentions. The court held building E was not an extension of the earlier project and municipal approval did not treat it as such. Section 80IB(10) requires a minimum one-acre plot but does not mandate the plot be vacant or limit the number of housing projects on it; projects meeting statutory conditions qualify for deduction. The HC also found no merger of two ground-floor flats to breach the 1,000 sq. ft. unit limit. Appeals were decided for the assessee against the Revenue and disposed of with no order as to costs.

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Issues Involved:
1. Eligibility for deduction under Section 80IB (10) of the Income Tax Act.
2. Commencement of construction date.
3. Size of the plot of land.
4. Size of the residential units.

Issue-wise Detailed Analysis:

1. Eligibility for Deduction under Section 80IB (10):
The primary issue was whether the assessee firm was eligible for claiming deduction under Section 80IB (10) despite allegedly failing to meet the primary conditions laid down under the section. The Tribunal had held that the assessee was entitled to the deductions, which was challenged by the Revenue. The court examined the definition and common understanding of a "housing project" and concluded that constructing even one building with several residential units would constitute a "housing project" under Section 80IB (10).

2. Commencement of Construction Date:
The Revenue argued that the approval for the 'E' building, granted on 11th October 2002, was an extension of the approvals granted for buildings A, B, C, and D, which commenced from 1993. Therefore, the project must be held to have commenced prior to 1st October 1998, making it ineligible for deduction. The court rejected this argument, stating that the 'E' building was an independent housing project approved for the first time on 11th October 2002, and not an extension of the earlier project.

3. Size of the Plot of Land:
The Revenue contended that the plot of land, admeasuring 2.36 acres, should be proportionately divided among the five buildings, resulting in less than one acre per building, thus disqualifying the project from the deduction. The court held that Section 80IB (10) specifies the size of the plot of land but not the size of the housing project. It clarified that the plot of land must have a minimum area of one acre, and it need not be vacant. The court emphasized that multiple housing projects could exist on a plot of land with a minimum area of one acre, and each could qualify for the deduction if they meet other statutory conditions.

4. Size of the Residential Units:
The Revenue argued that two flats on the ground floor of 'E' building were merged into one, exceeding the 1000 square feet limit, thus violating Section 80IB (10)(c). The Tribunal found no evidence of such a merger, noting that the flats were neither sold nor any application for merger was made. The court upheld the Tribunal's decision, rejecting the Revenue's argument.

Conclusion:
The court answered the common question of law in favor of the assessee and against the Revenue, holding that the assessee firm was eligible for the deductions under Section 80IB (10) for the assessment years 2004-2005 and 2005-2006. The appeals were disposed of accordingly with no order as to costs.

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