Assessee wins appeal: granted under (10) for project.

The Tribunal partly allowed the assessee's appeal, ruling that while merging plots to meet the 1-acre requirement was impermissible, the assessee was entitled to the deduction under section 80IB(10) due to the relaxation provided by the notification for projects under the slum rehabilitation scheme. The Tribunal emphasized that additional conditions imposed by the board's notification, contradicting the statute, could not be upheld.

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Issues Involved:

1. Rejection of deduction under section 80IB(10) of the Income Tax Act, 1961.
2. Whether multiple plots can be considered as one project for the purpose of section 80IB(10).
3. Applicability of the notification dated 5th January 2011 regarding slum rehabilitation schemes.

Issue-wise Detailed Analysis:

1. Rejection of Deduction under Section 80IB(10):

The assessee's appeal concerns the rejection of a deduction claim under section 80IB(10) for the Assessment Year 2008-09. The assessee had claimed this deduction for profits from three housing projects under the Slum Rehabilitation Scheme (SRS) of the Government of Maharashtra. The Assessing Officer (AO) denied the claim on the grounds that the minimum area requirement of 1 acre, as stipulated in clause (b) of section 80IB(10), was not met.

2. Whether Multiple Plots Can Be Considered as One Project:

The assessee argued that the three plots should be considered as one project for the purpose of the deduction. The rationale was that under the SRS, plots are often less than 1 acre, and since these plots were under one city survey number, they should be aggregated. However, the AO did not accept this argument, leading to the disallowance of the deduction.

On appeal, the assessee reiterated that the projects were developed under one survey number and should be considered a single project. The assessee cited the case of CIT v. Vandana Properties [2013] 353 ITR 36, where it was held that a "housing project" could mean constructing a building or group of buildings with several residential units, and the minimum area condition of 1 acre need not apply if only part of the plot is used for the eligible project.

The Tribunal, however, referred to its earlier decisions for the assessment years 2003-04 to 2005-06 and 2006-07, where it was held that each project must meet the minimum area requirement independently. The Tribunal noted that the plots in question were not contiguous and were separated by other slum areas, thus failing to meet the 1-acre requirement when considered individually. Consequently, the Tribunal upheld the AO's decision, stating that merging the plots to meet the 1-acre requirement was not permissible.

3. Applicability of the Notification Dated 5th January 2011:

The assessee also argued that the slum rehabilitation scheme had been notified by the board on 5th January 2011, making the minimum area condition inapplicable. The CIT(A) noted that the notification applied only to projects approved after 1st April 2004, which did not include the assessee's projects.

The Tribunal examined the notification and the relevant provisions of section 80IB(10). It noted that the notification aimed to relax the minimum area condition for projects under government-framed slum rehabilitation schemes. The Tribunal found that the projects were indeed carried out under such a scheme and that the scheme had been notified by the board.

However, the Tribunal observed that the notification's condition, which limited its applicability to projects approved after 1st April 2004, was inconsistent with the legislative intent and the provisions of section 80IB(10). The Tribunal held that the board could not impose new conditions that contradicted the statute's provisions and the legislative intent. Therefore, the Tribunal concluded that the assessee was entitled to the benefit of the proviso to section 80IB(10), making the minimum area condition inapplicable.

Conclusion:

The Tribunal ruled that the assessee's appeal was partly allowed. While the merging of plots to meet the 1-acre requirement was not permissible, the assessee was entitled to the deduction under section 80IB(10) due to the relaxation provided by the notification for projects under the slum rehabilitation scheme. The Tribunal emphasized that any additional conditions imposed by the board's notification, which were inconsistent with the statute, could not be upheld.

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