Deduction U/s. 80IB(10) cannot be denied merely for approval of Housing Project in Land Owner Name

The short reason for which deduction under section 80IB(10) has been declined to the assessee is that the assessee did not own the land on which the housing project, by the name of ‘Narayan Bungalows’, is built. The assessee was in development agreement with Smt Lilawaitiben Goverdanbahi Desai & Ors and the approval of the regulatory authority was also in the name of the original landowners. While there is little dispute that the assessee had de facto control over land and the entrepreneurial risk was borne by the assessee, the deduction was declined on the ground that the conditions regarding deduction under section 80IB(10), i.e. ownership of land and approval of project etc, were not satisfied and that the assessee was merely acting as a contractor. When assessee carried this issue, i.e. deduction of Rs 1,60,88,554 under section 80IB(10) being declined, in appeal before the CIT(A), he reversed the action of the Assessing Officer.

On appeal ITAT held that The business model adopted by the assessee does not vitiate the claim of deduction under section 80IB(10) but then the Assessing Officer has primarily declined the deduction with that basic approach. There is no dispute regarding assessee having taken the entrepreneurial risk and acted as an entrepreneur rather than as a contractor, and that is what is relevant. In view of the above discussions, as also bearing in mind entirety of the case, we approve the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter.