Case Law Details

Case Name : CIT Vs Shravanee Constructions (Karnataka High Court)
Appeal Number : ITA. No. 421 of 2009 and 422 of 2009
Date of Judgement/Order :
Related Assessment Year : 28/02/2012
Courts : All High Courts (3793) Karnataka High Court (196)

S. 80-IB(10) deduction available to taxpayer who is not merely a land owner but carries on activities along with promoter for developing & building approved housing project

CIT  v. Shravanee Constructions (Karnataka High Court)

Section 80-IB(10) of the Act is applicable not for merely building housing project but for developing and building housing project.  In terms of the agreement, the taxpayer not only undertook the development activities on the land in question, but in fact the taxpayer entered into an agreement of sale with the owners of the land, paid the entire consideration. However, it did not execute a registered sale deed in its name. Thus, the Assessee contributed the land.

Also the Assessee, undertook the aforesaid development activities on the said land and thus complied with all other conditions, which have to be fulfilled before claiming benefit under Section 80-IB(10) of the Act.  The promoter has invested money in the construction. It is after completion of the building in terms of the agreement the taxpayer was given 22 percent share of the building area. Further after the sale of built area the Assessee claimed deduction under Section 80-I B(10) of the Act.

Accordingly, it is clear from the Joint Development Agreement that the undertaking of developing and building housing project was jointly undertaken by the taxpayer and the builder. Therefore, in respect of residential units the persons who undertook this undertaking are entitled to the benefit of Section 80-IB(10) of the Act in proportion to the share to which they are entitled to in the built up area.

The object of Section 80-IB(10) is that when all persons who have made investments in the housing project which is for the benefit of middle and lower class people and when they have complied with all the conditions prescribed under the aforesaid provision, both of them were entitled to 100 percent deduction as provided under the said provision. Therefore, the taxpayer is entitled for 100 percent deduction under Section 80-IB(10) of the Act.

· Section 80-IB(10) of the Act is applicable not for merely building housing project but for developing and building housing project.

· In terms of the agreement, the taxpayer not only undertook the development activities on the land in question, but in fact the taxpayer entered into an agreement of sale with the owners of the land, paid the entire consideration. However, it did not execute a registered sale deed in its name. Thus, the taxpayer contributed the land.

· Also the taxpayer, undertook the aforesaid development activities on the said land and thus complied with all other conditions, which have to be fulfilled before claiming benefit under Section 80-IB(10) of the Act.

· The promoter has invested money in the construction. It is after completion of the building in terms of the agreement the taxpayer was given 22 percent share of the building area. Further after the sale of built area the taxpayer claimed deduction under Section 80-I B(10) of the Act.

· Accordingly, it is clear from the JDA that the undertaking of developing and building housing project was jointly undertaken by the taxpayer and the builder. Therefore, in respect of residential units the persons who undertook this undertaking are entitled to the benefit of Section 80-IB(10) of the Act in proportion to the share to which they are entitled to in the built up area.

· The object of Section 80-IB(10) is that when all persons who have made investments in the housing project which is for the benefit of middle and lower class people and when they have complied with all the conditions prescribed under the aforesaid provision, both of them were entitled to 100 percent deduction as provided under the said provision. Therefore, the taxpayer is entitled for 100 percent deduction under Section 80-IB(10) of the Act.

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