2015 (2) TMI 257 - HC - Income Tax

Land ownership not mandatory for Section 80IB(10) housing deduction; car park excluded from built-up area limit

HC held the assessee eligible for deduction under Section 80IB(10), rejecting Revenue's contention that only a 'developer' owning the land could claim the ... Eligibility to deduction under Section 80IB(10) - Assessee is not a developer, but only a builder - Held that:- For the purpose of claiming deduction, it is not necessary that the assessee, who is engaged in the business of developing and construction of housing project, should be the owner of the land. See CIT Chennai. Versus M/s. Ceebros Property Development (P) Ltd [2012 (12) TMI 296 - MADRAS HIGH COURT] - Decided in favour of assessee. Car park area exclusion from built up area of the residential unit for the purpose of computing deduction under Section 80IB(10) - Held that:- there is no justification in including the car park in the definition of the built-up area of the residential unit for the purpose of determining the maximum built-up area. In such view of the matter, we are inclined to accept the reasoning of the Commissioner of Income Tax (Appeals) drawing support from the Tamil Nadu Apartment Ownership Act, 1994, which was confirmed by the Tribunal. Accordingly, the second substantial question of law is answered against the Revenue and in favour of the assessee.- Decided in favour of assessee. Issues:1. Interpretation of eligibility criteria under Section 80IB(10) for deduction.2. Inclusion of car park area in the built-up area calculation for deduction under Section 80IB(10).Issue 1 - Interpretation of eligibility criteria under Section 80IB(10) for deduction:The case involved a dispute regarding the eligibility of the assessee, a promoter, for deduction under Section 80IB(10) of the Income Tax Act. The Assessing Officer denied the deduction on the grounds that the assessee had not developed the flats and that the built-up area of 25 flats exceeded the prescribed limit of 1500 sq.ft. when including the car park area sold to these flat owners. The Commissioner of Income Tax (Appeals) allowed the deduction, stating that ownership of land is not a prerequisite for claiming the deduction. The Tribunal upheld this decision, leading to the Revenue's appeal. The Court referred to relevant case laws and provisions to conclude that the assessee was entitled to the deduction, rejecting the Revenue's appeal on this issue.Issue 2 - Inclusion of car park area in the built-up area calculation for deduction under Section 80IB(10):The second issue revolved around whether the car park area should be considered as part of the built-up area for the purpose of calculating the maximum limit of 1500 sq.ft. under Section 80IB(10). The Revenue argued that the car park area should not be treated as common area and should be included in the calculation. However, the assessee contended that the car park area should not be included in the built-up area calculation. The Court examined the relevant provisions and definitions, including the Tamil Nadu Apartment Ownership Act, and concluded that the car park area should not be included in the built-up area calculation. The Court upheld the decision of the Commissioner of Income Tax (Appeals) and the Tribunal, ruling in favor of the assessee on this issue.In conclusion, the Court dismissed the Revenue's appeal on all grounds, affirming the Tribunal's decision to grant the deduction to the assessee.