By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punjabi, Bhadresh Doshi, Chartered Accountants
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Section 80-IB of the Income-tax Act 1961 – Deduction available even if sold area exceeds approved area and assessee has not paid fees to regularise the same.
Facts
For the relevant assessment year, the Assessing Officer disallowed the assessee’s claim for deduction u/s. 80-IB since the built-up area sold by the assessee was in excess of the sanctioned area. The Assessing Officer, therefore, held that the project constructed by the assessee was not an approved housing project. Before the CIT(A), the assessee contended that though it had not made payment of the compounding fee for regularisation of the excess area constructed, it could not be said that the housing project was not approved. The CIT(A) held that the assessee was entitled for deduction u/s. 80IB(10).
Held
The Tribunal, relying on the decisions in the following cases, held that the CIT(A)’s order in favour of the assessee was in accordance with law: a. Petron Engg. Construction (P.) Ltd. V CBDT (1989) 175 ITR 523/(1988) 41 Taxman 294 (SC) b. Pandian Chemicals Ltd. V CIT (2003) 262 ITR 278/129 Taxman 539 c. CIT V N.C. Budharaja & Co. (1993) 204 ITR 412/10 Taxman 312 d. IPCA Laboratories Ltd. V Dy. CIT (2004) 266 ITR 521/135 Taxman 594 The Tribunal noted as under : It was clear that the assessee has fulfilled the conditions mentioned in section 80-IB(10). The assessee has obtained approval of the concerned local authorities for construction of a housing project. The fact that the compounding fee for regularisation of the excess area constructed by the assessee has not yet been paid would not mean that the housing project constructed by the assessee is unlawful. Thus, there was no violation of the provisions of section 80-IB.
The incentive provisions must be interpreted in a manner which advances the object and intention of Legislature. The fact that the assessee has obtained approval for the housing project cannot be lost sight of. As for the excess area constructed, it is for the local authority to look into the violations, if any, in the construction of the housing project. That, however, does not authorise the Assessing Officer to hold that the assessee has not got approval for the housing project or that the conditions laid down in section 80-IB(10) violated.
Therefore,the assessee was entitled to deduction u/s. 80-IB(10).
