July 2019

Section 80-IB(10) of ITA, 1961 Housing project Special deduction u/s. 80-IB(10) No condition in section as it stood at relevant time restricting allotment of more than one unit to members of same family Allottees later removing partitions and combining two flats into one No breach of condition that each unit should not be of more than 1,000 sq. ft. Assessee entitled to deduction

K.B.Bhujle
Advocate

25  Prinipal CIT vs. Kores India Ltd.; 414 ITR 47 (Bom) Date of order: 24th April, 2019 A.Y.: 2009-10

 

Section 80-IB(10) of ITA, 1961 Housing project Special deduction u/s. 80-IB(10) No condition in section as it stood at relevant time restricting allotment of more than one unit to members of same family Allottees later removing partitions and combining two flats into one No breach of condition that each unit should not be of more than 1,000 sq. ft. Assessee entitled to deduction

 

The assessee was engaged in the business of constructing residential houses. He constructed residential houses of less than 1,000 sq. ft. and claimed deduction u/s. 80-IB(10) of the Income-tax Act, 1961. The AO rejected the claim on the ground that the assessee has breached the condition of 1,000 sq. ft. per flat as several units adjacent to each other were allotted to members of the same family.

 

The Tribunal allowed the claim.

 

On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under:

 

i)   At the relevant time when the housing project was constructed and the residential units were sold, there was no condition in section 80-IB(10) restricting the allotment of more than one unit to the members of the same family. The assessee was therefore free to have allotted more than one unit to members of the same family.

 

ii)   According to the materials on record, after such units were sold under different agreements, the allottees had desired that the partition wall between the two units be removed. It was the decision of the members to remove the walls and not a case where the assessee had, from the beginning, combined two residential units and allotted such larger unit to one member.

 

iii)   The order of the Tribunal rejecting the objections raised by the Department was not erroneous. No question of law arose.

 

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