The assessee is a owner of land admeasuring 1 lakhs sq ft. Assessee has decided to develop the housing project on the said land in a phased manner. The first phase is on a plot of land having area 2500 sq mtr. The project satisfies all the conditions of the section. After obtaining the completion certificate of the project assessee has commenced phased 2, which also satisfies all the conditions of the section. However, the AO has issued a show cause that in view of section 80IBA(2)(e), that assessee is eligible for deduction u/s 80IBA on the plot of land only once and since assessee has claimed the deduction for phase 1, he is not eligible for deduction for phase 2. The assessee submits that on the said plot of land he can develop more than two projects and is entitled for deduction if he suffices that the conditions of the section are fulfilled and for this proposition the assessee relied upon the decision of Vandana Properties in context of section 80IB(10) of the Act.

Is this action of AO justified?

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