[CIT v. Vandana Properties (Bom.), ITA Nos. 3633 of 2009 and 4361 of 2010 dated 28-3-2012]
The assessee-firm was engaged in the business of construction and development of housing projects. On a plot of land admeasuring 2.36 acres in Mumbai the assessee had constructed buildings A, B, C and D over a period of years, in respect of which no deduction u/s.80IB(10) of the Income-tax Act, 1961 was claimed. In the year 2001, the assessee became entitled to construct an additional building ‘E’ on the said plot of land. IOD was approved by the Municipal Corporation on 11-10-2002 and the commencement certificate was issued on 10-03-2003. For the A.Ys. 2004-05 and 2005-06, the assessee’s claim for deduction u/s.80IB(10) was rejected by the Assessing Officer. The Tribunal allowed the assessee’s claim.
On appeal by the Revenue the following issues were considered by the Bombay High Court:
(i) What is a housing project u/s.80IB(10)?
(ii) Whether, if the approval for construction of ‘E’ building was granted by local authority subject to the conditions set out in the first approval granted on 12-5-1993 for construction of A and B buildings, construction of ‘E’ building is an extension of the earlier housing project for which approval was granted prior to 1-10-1998 and, therefore, benefit of section 80IB(10) cannot be granted?
(iii) Whether the housing project must be on a vacant plot of land which has minimum area of one acre and if there are multiple buildings and the proportionate for each building is less than one acre, deduction u/s.80IB(10) can be denied?
The Bombay High Court upheld the decision of the Tribunal and held as under:
“(i) As the expression ‘housing project’ is not defined, it must have the common parlance meaning and means constructing a building or group of buildings consisting of several residential units. The approval granted to a building plan constitutes approval granted to a housing project. Construction of even one building with several residential units of the size not exceeding 1000 sq.ft. would constitute a ‘housing project’ u/s.80IB(10).
(ii) ‘E’ building is an independent housing project and not an extension of the housing project already existing on the plot, because when the earlier plans were approved, ‘E’ building was not even contemplated and came into existence much later. The fact that the approval was granted on the same terms as that granted to the other buildings does not make it an ‘extension’.
(iii) Section 80IB(10)(b) specifies the size of the plot of land but not the size of the housing project. While the plot must have a minimum area of one acre, it need not be a vacant plot. The object of section 80IB(10) is to boost the stock of houses. There can be multiple housing projects on a plot of land having minimum area of one acre.”
