Smt. Parayarukandy Vettath Hemalatha Vs DCIT (Kerala High Court)
One-Acre Promise, Seventy-Cent Performance: Personal Mansion on Reserved Land Sinks Builder’s Section 80-IB(10) Deduction
Summary: A housing project may be developed in phases and the one-acre condition u/s 80-IB(10) can be tested with reference to the project as a whole. However, a developer who initially earmarks more than one acre for an affordable housing project, but subsequently withdraws a substantial portion for constructing her own 4,000 sq. ft. residential house, cannot continue claiming that the entire land formed part of the eligible project.
The Kerala High Court held that the assessee’s deliberate withdrawal of 46.93 cents reduced the actual project area to 70.57 cents, below the statutory minimum of one acre. The claim for 100% deduction u/s 80-IB(10) was, therefore, rightly rejected.
The assessee proposed an affordable housing project over 117.5 cents of land and obtained a building permit on 16 November 2005. The scheme contemplated construction in two phases. Phase I occupied 70.57 cents, while Phase II was proposed over the remaining 46.93 cents.
The assessee completed the first phase consisting of 60 apartments. Since the apartments were sold in different years, deduction u/s 80-IB(10) was claimed for AYs 2009-10 & 2018-19.
