The Karnataka High Court allowed the deduction under Section 80IB (10) on construction of housing projects as the size or number of housing projects undertaken on a minimum area of one acre of land is not significant.
The assessee, M/s Karavali Housing is a partnership firm engaged in the business of development of real estate and construction of residential apartments and business complexes and execution of housing projects. For the assessment years under consideration, proceedings were concluded by the Assessing Officer under Section 143(3) read with Section 147 of the Act disallowing the deduction under Section 80IB(10) as amended by the assessee.
The revenue has raised the issue whether on the facts and in the circumstances of the case, the Tribunal was right in law in allowing deduction under Section 80IB(10) to the assessee despite violation of condition contained in 80IB(10)(b) which states that the housing project should be on a plot of land which has a minimum area of 1 acre.
The division bench of Justice Sujatha and Justice Ravi V.Hosmani held that on a plot of land having minimum area of one acre, there can be any number of housing projects and so long as those housing projects are approved by the local authority and fulfill the conditions set out under Section 80IB(10), the deduction thereunder cannot be denied to all those housing projects. Section 80IB(10), while specifying the size of the plot of land, does not specify the size or the number of housing projects that are required to be undertaken on a plot having a minimum area of one acre. As a result, significance of the size of the plot of land is lost and, therefore, the assessee subject to fulfilling other conditions becomes entitled to Section 80IB(10) deduction on construction of a housing project on a plot having area of one acre, irrespective of the fact that there exist other housing projects or not. In these circumstances, the decision of the Tribunal in rejecting the contention of the Revenue regarding the size of the plot cannot be faulted.
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