2014 (11) TMI 610 - HC - Income Tax

High Court upholds Tribunal's order on Tax Case (Appeals) under Section 80IB

The Commissioner of Income Tax Versus Smt. Jagadeeswari

The High Court confirmed the Tribunal's order, dismissing the Tax Case (Appeals) and upholding the assessee's entitlement to deductions under Section 80IB ... Entitlement for deduction u/s 80IB – Assessee not the owner of property – Built up area of flats less than 1500 sq. ft. – Held that:- Following the decision in The Commissioner of Income Tax Business Ward XV(3), Chennai. Versus M/s. Sanghvi and Doshi Enterprise [2012 (12) TMI 84 - MADRAS HIGH COURT] - for the purpose of considering the deduction, it is not necessary that the assessee, engaged in developing and construction of housing project, should be the owner of the property - when the local authority, being part of Chennai Metropolitan Development Authority and also the approving authority, thus having certified about the completion, there was no justifiable ground to invoke Explanation (2) to sub-section (10) of Section 80IB of the Income Tax Act for the purpose of negativing the claim - the Explanation cannot have a control on the substantive provision – thus, the assessee is entitled to deduction in respect of the built up area exceeding 1500 sq. ft. on a proportionate basis – thus, the order of the Tribunal is upheld – Decided against revenue. Issues:1. Entitlement for deduction under Section 80IB when not the owner of the property2. Necessity of completion certificate for deduction under Section 80IB3. Entitlement to deduction under Section 80IB(10) for units with built-up area less than 1500 sq.ft.4. Entitlement for deduction under Section 80IB(10) for plots measuring less than 1 acreAnalysis:1. The High Court addressed the issue of entitlement for deduction under Section 80IB when the assessee is not the owner of the property. Referring to previous judgments, the Court held that ownership of the property is not a prerequisite for claiming the deduction. The Court emphasized that the certification by the local authority regarding completion is crucial, and the absence of a completion certificate does not necessarily invalidate the claim for deduction under Section 80IB.2. The Court examined the necessity of a completion certificate for claiming deduction under Section 80IB. It noted that a letter issued by the Assistant Commissioner, Corporation, stating that the project is under construction was deemed sufficient, despite the absence of a formal completion certificate. The Court highlighted that the local authority's certification plays a significant role in determining the eligibility for deduction under Section 80IB.3. Regarding the entitlement to deduction under Section 80IB(10) for units with a built-up area less than 1500 sq.ft., the Court reiterated its previous decision where it allowed the deduction on a proportionate basis for units exceeding the specified size limit. The Court emphasized that each unit's size should be considered individually to determine eligibility for the deduction under Section 80IB(10).4. The Court also examined the issue of entitlement for deduction under Section 80IB(10) concerning plots measuring less than 1 acre. It upheld the assessee's right to claim the deduction, even when building permissions were sought separately for each plot. The Court's decision was consistent with its previous rulings and confirmed the assessee's entitlement to the deduction under Section 80IB(10) based on the specific circumstances of the case.In conclusion, the High Court dismissed the Tax Case (Appeals) in line with its previous judgments and confirmed the Tribunal's order. The Court reiterated the principles established in earlier decisions regarding the interpretation and application of Section 80IB of the Income Tax Act. The assessee's entitlement to deductions under various scenarios was upheld, emphasizing the importance of compliance with local authority regulations and certifications in claiming tax benefits under Section 80IB.