THE COMMISSIONER OF INCOME TAX CENTRAL V. NARAYAN LAND ESTATE

TAX APPEAL NO. 206 of 2009

AI Insights

The case revolves around the eligibility of Narayan Land Estate to claim deductions under section 80IB(10) of the Income Tax Act, 1961, for a housing project. The Assessing Officer initially denied the deduction because the land was owned by a different party and the necessary approvals were also in the name of the landowner. However, the ITAT reversed this decision, leading to the present appeal by the Revenue. The Gujarat High Court, referencing a similar case (Radhe Developers), affirmed that the ownership of the land and the approvals being in the name of the landowner do not disqualify the assessee from claiming the deduction.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 368933 (HC-GUJARAT)
• Appeal Type: High Court cases
• Pronouncement Date: 21-12-2013
• Appeal Filed By: Department
• Assessment Year: 2003-2004
• Other Referred Cases: Commissioner of Income-Tax v. Radhe Developers (2012) 341 ITR 403 (Guj)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SWATI SOPARKAR
• Assessee Lawyers: MAUNA BHATT
• Keywords: Construction; Deduction; Income Tax; Land ownership; Development Approval
• Section: 80IB(10); 80IB(1)

Judgement Text

"O/TAXAP/206/2009 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 206 of 2009 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.D.KOTHARI ============================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ============================================= THE COMMISSIONER OF INCOME TAX CENTRAL- II....Appellant(s) Versus NARAYAN LAND ESTATE....Opponent(s) ============================================= Appearance: MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1 MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ============================================= CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.D.KOTHARI Date : 21/12/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 4 Downloaded on : Thu Jun 05 14:54:40 IST 2025 Uploaded by LAVKUMAR J JANI(HC00210) on Tue Jan 07 2014 2013:GUJHC:29817-DB NEUTRAL CITATION O/TAXAP/206/2009 JUDGMENT 1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 29.06.2007 passed by the learned Income Tax Appellate Tribunal (hereinafter referred to as 'the ITAT') for the Assessment Year 2003-2004, the Revenue has preferred present Tax Appeal to consider the following substantial question of law: “Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing deduction u/s 80IB(10) r.w.s 80IB(1) to the assessee when the approval by the local authority as well as completion certificate was not granted to the assessee but to the landowner and the rights and the obligations under the said approval were not transferable, and when the transfer of dwelling units in favour of the end users was made by the landowner and not by the assessee?” 2. That the assessee is engaged in the construction activities and filed its return of income for the year under consideration declaring total income of Rs.10,37,430/- after claiming deduction u/s. 80IB of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') of Rs.41,26,248/-. The assessee took power of attorney on the land from the land owners and after constructing the housing units transferred it to various customers by tripartite agreement with the land owner, assessee and the customers. The assessee on the basis of the said activities claimed deduction u/s. 80IB(10) of the Act. The Assessing Officer disallowed the claim of the assessee with respect to deduction u/s. 80IB(10) of the Act on the ground that the land on which the housing project was built was not owned by the assessee and the approval for development project was also not in the name of the assessee but in the name of the land owner, the assessee is not entitled to the deduction u/s. 80IB(10) of the Act. Page 2 of 4 Downloaded on : Thu Jun 05 14:54:40 IST 2025 Uploaded by LAVKUMAR J JANI(HC00210) on Tue Jan 07 2014 2013:GUJHC:29817-DB NEUTRAL CITATION O/TAXAP/206/2009 JUDGMENT 3. Feeling aggrieved and dissatisfied with the order passed by the Assessing Officer, disallowing the deduction u/s. 80IB(10) of the Act, the assessee preferred an appeal before the learned CIT(A) and the learned CIT(A) upheld the disallowance made by the Assessing Officer. 4. Feeling aggrieved and dissatisfied with the order passed by the CIT(A), the assessee preferred the appeal before the learned ITAT and by impugned judgment and order, the learned ITAT has allowed the said appeal deleting the said disallowance made by the Assessing Officer with respect to the deduction u/s. 80IB(10) of the Act and held that the ownership of the land was not a precondition for deduction u/s. 80IB(10) of the Act. 5. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned ITAT, the revenue has preferred present Tax Appeal to consider the following substantial question of law: “Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing deduction u/s 80IB(10) r.w.s 80IB(1) to the assessee when the approval by the local authority as well as completion certificate was not granted to the assessee but to the landowner and the rights and the obligations under the said approval were not transferable, and when the transfer of dwelling units in favour of the end users was made by the landowner and not by the assessee? 6. Heard Ms. Mauna Bhatt, learned advocate appearing on behalf of the appellant and Shri Soparkar, learned counsel appearing on behalf of the respondent – assessee. 7. Shri Soparkar, learned counsel appearing on behalf of the assessee has vehemently submitted that the aforesaid Page 3 of 4 Downloaded on : Thu Jun 05 14:54:40 IST 2025 Uploaded by LAVKUMAR J JANI(HC00210) on Tue Jan 07 2014 2013:GUJHC:29817-DB NEUTRAL CITATION O/TAXAP/206/2009 JUDGMENT issue/question raised in the present Tax Appeal is squarely covered against the Revenue by the decision of the Division Bench of this Court in the case of Commissioner of Income- Tax v. Radhe Developers reported in (2012) 341 ITR 403 (Guj). 7.1. The learned advocate appearing on behalf of the appellant – Revenue is not in a position to dispute the above. 8. In the case of Radhe Developers (supra), the Division Bench of this Court has specifically held with respect to housing project that for special deduction u/s. 80IB(10) of the Act, ownership of property is not a condition precedent. In the aforesaid decision, the Division Bench has specifically held that the assessee is entitled to the benefits u/s. 80IB(10) of the Act even where the title of the lands had not passed on to the assessee and in some cases the development permission may also have been obtained in the name of the original land owners. Applying the ratio of the decision in the case of Radhe Developers (supra) to the facts of the case on hand, the question raised in the present Tax Appeal is answered against the Revenue. 9. Under the circumstances, present appeal deserves to be dismissed and is, accordingly, dismissed. No costs. (M.R.SHAH, J.) (R.D.KOTHARI, J.) Jani Page 4 of 4 Downloaded on : Thu Jun 05 14:54:40 IST 2025 Uploaded by LAVKUMAR J JANI(HC00210) on Tue Jan 07 2014 2013:GUJHC:29817-DB NEUTRAL CITATION "