High Court affirms deduction eligibility under Section 80IB(10) for composite housing scheme despite separate permits.

The High Court upheld the Tribunal's decision that the assessee qualified for a deduction under Section 80IB(10) despite separate permits for different blocks on the same land. The project was deemed a composite housing scheme meeting statutory requirements, entitling the assessee to the deduction. The Court emphasized that if a project is approved as a housing project and complies with Section 80IB conditions, deductions cannot be denied based on separate permits for different blocks. The Revenue's appeal was dismissed, affirming the Tribunal's decision based on legal interpretations and precedents.

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Issues:
1. Eligibility of the assessee firm to claim deduction under Section 80IB(10) despite not meeting the primary condition of 1 acre plot size for each housing plot.
2. Interpretation of the conditions stipulated under Section 80IB(10) regarding the size of the land for development.

Issue 1 - Eligibility for Deduction under Section 80IB(10):
The case involved a company engaged in construction and sale of residential flats, owning 1.065 acres of land and developing a residential project with six housing towers approved by the CMDA. The assessee claimed deduction under Section 80IB(10) for the assessment year 2007-08. The Commissioner of Income Tax (Appeals) held that the assessee did not comply with Section 80IB(10) provisions, leading to the disallowance of the deduction. The Assessing Officer also disallowed the deduction, prompting the assessee to appeal to the Tribunal.

Issue 1 Analysis:
The Tribunal found that the assessee had developed a project on a land measuring 1 acre and 6.5 cents, allotting 1022 sq.ft of undivided share of land to each of the 48 allottees. The Tribunal considered this as a composite scheme, allowing the assessee the benefit of Section 80IB(10). Referring to the Bombay High Court decision in CIT v. Vandana Properties, the Tribunal concluded that the project qualified for the deduction under Section 80IB(10) due to the composite nature of the housing scheme.

Issue 2 - Interpretation of Section 80IB(10) Conditions:
The main contention revolved around whether the assessee fulfilled the essential condition of a minimum area of one acre for a single project as required under Section 80IB(10). The Revenue argued that the separate permits granted for construction of different blocks on the same land measuring 1.065 acres did not satisfy the statutory requirement.

Issue 2 Analysis:
The High Court analyzed the facts and legal provisions, emphasizing that the approval granted by the CMDA for the composite housing scheme was crucial. The Court held that if a project meets the criteria for approval as a housing project and fulfills the conditions under Section 80IB, deductions cannot be denied merely because separate permits were obtained for different blocks. Citing precedents, the Court confirmed that if the project is approved in compliance with the Development Control Rules, the assessee is entitled to the deduction for the entire project. The Court dismissed the Revenue's appeal, affirming the Tribunal's decision based on the relevant legal interpretations and precedents.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the assessee qualified for the deduction under Section 80IB(10) despite the separate permits for different blocks on the same land, as the project constituted a composite housing scheme meeting the statutory requirements.

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