The IT department got the data from the respective civic bodies. It also checked the completion certificates of housing projects to detect fraud.
A verification of the tax exemptions claimed by builders and property developers under section 80-IB(10) of the Income Tax (I-T) Act, 1961, by the income-tax department has revealed that the government was defrauded of nearly Rs100 crore over four years.
Senior I-T officials said the verification process initiated by the Pune office of the department into the misuse of the 80-IB(10) found a mention in the best I-T practices book recently released by the Central Board of Direct Taxes (CBDT).
A senior I-T official said that at least 29 cases had been detected in the period between March 2004 and March 2008. Builders in Pune and Nashik in particular made fraudulent claims of tax exemption under the section.
Of the 29 cases detected, 20 were from Pune. The highest claim so far has come from a builder in Pune. The claim amounts to Rs12 crore. M Narasimhappa, former chief commissioner of income tax (Pune), who retired recently, had told DNA that the total amount of such fraudulent claims could exceed Rs100 crore.
An official said the department has already issued notices to the builders, asking them to return the refunds. “In cases where a refund has not been paid to the builder, the builder has been informed about the wrongful claims made to the department,” he said.
“The central information branch got the data from the respective municipal corporations, which were later forwarded to the assessee offices, where we found out the false claims after thorough verification,” the official said.
He explained that the department also checked the completion certificates of the housing projects of these companies to detect the wrongful claims.
Some of the cases have now been brought before the I-T commissioner (appeals) while four have been referred to the appellate tribunal. In case of further anomalies, the cases may even be referred to the Bombay high court.
80-IB(10) was introduced by the central government in a bid to boost the housing sector. Under this rule, a cent per cent tax holiday was given to a builder who started a project after April 1, 2004, and completed it before March 31, 2008. Each unit under the scheme must not exceed an area of 1,500 square feet.
80-IB(10) was a sub-section formulated by the CBDT, under which deductions were given in respect of profits and gains from certain industrial undertakings other than infrastructure development. Claims are also inadmissible if a project has not been issued a completion certificate.
The rule was withdrawn from March 1, 2007.
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