Karnataka HC allows the deduction of income tax on the construction of a housing project as the size or number of housing projects undertaken on a minimum area of ​​one acre of non-significant land [Read Order]

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The Karnataka High Court allowed the deduction under Article 80IB (10) on construction of housing projects because the size or number of housing projects undertaken on a minimum area of ​​one acre of land is not not significant.

The appraised, M / s Karavali Housing is a partnership company engaged in the development of real estate and the construction of residential apartments and commercial complexes and the execution of housing projects. For the valuation years considered, the procedures were concluded by the valuation agent under Article 143 (3) read with Article 147 of the Law prohibiting deduction under Article 80IB ( 10) as modified by the appraisee.

The receipts raised the question of whether, having regard to the facts and circumstances of the case, the Tribunal was correct in its right to allow the deduction under Article 80IB (10) to the appraised despite the violation of the condition in section 80IB (10) (b) which states that the housing project must be on land that has a minimum area of ​​1 acre.

The divisional bench of Judge Sujatha and Judge Ravi V. Hosmani estimated that on a land with a minimum area of ​​one acre there can be any number of housing projects and as long as these housing projects are approved by the local authority and meet the conditions set out in Article 80IB (10), the resulting deduction cannot be refused for all these housing projects. Section 80IB (10), while specifying the size of the plot of land, does not specify the size or number of housing projects that must be undertaken on a plot with a minimum area of ​​one acre. As a result, the importance of the size of the plot of land is lost and, therefore, the assessed subject to fulfill other conditions is entitled to the deduction of Article 80IB (10) on the construction of a housing project on a one acre plot, regardless of whether or not there are other housing projects. In these circumstances, the Tribunal’s decision to reject the tax authorities’ claim concerning the size of the plot cannot be criticized.

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