Housing project – Deduction u/s. 80-IB(10) – A. Y. 2007-08 – Condition precedent – Plot must have minimum area of one acre – Composite housing scheme consisting of six blocks in area exceeding one acre – Housing project approved under Development Control Rules – Separate plan permits were obtained for six blocks is not a ground for denial of deduction – Assessee entitled to deduction

CIT vs. Voora Property Developers P. Ltd.; 373 ITR 317 (Mad):

For the A. Y. 2007-08, in the assessment order u/s. 143(3) of the Income-tax Act, 1961, the Assessing Officer had allowed the assessee’s claim for deduction u/s. 80-IB(10) in respect of the housing project consisting of six blocks in a area exceeding one acre. The Commissioner set aside the assessment order u/s. 263 for reconsidering the claim for deduction u/s. 80-IB(10) of the Act holding that the assessee had developed six separate projects in one single piece of land measuring 1.065 acres and the assessee did not fulfill the essential condition of the minimum area of one acre for a single project as laid down u/s. 80-IB(10). Accordingly, the Assessing Officer disallowed the claim for deduction u/s. 80-IB(10) of the Act. The Tribunal allowed the assessee’s claim.

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

“i) There was no dispute in the approval granted by the CMDA in respect of the composite housing scheme. When the Legislature introduced 100% deduction it was known that the local authorities could approve a housing project to the extent permitted under the Development Control Rules. When the project fulfilled the criteria for being approved as a housing project, the deduction could not be denied u/s. 80-IB(10) merely because the assessee had obtained a separate plan permit for six blocks.

ii) If the conditions specified u/s. 80-IB are satisfied, then deduction is allowable on the entire project. Since the project was approved in accordance with the Development Control Rules, the assessee would be entitled to 100% deduction on the entire project approved by the local authority.

iii) The assessee constructed six blocks in a land measuring one acre and 6.5 cents which admittedly exceeded the required area specified in clause (a) of section 80-IB(10), viz., one acre. Therefore, the assesee was entitled to the deduction.”