2012 (7) TMI 998 - AT - Income Tax

Summary

Issues Involved:

1. Deduction u/s 80IB(10) on profit derived from the sale of unutilized FSI.
2. Ownership and approval of the housing project.
3. Compliance with conditions prescribed u/s 80IB(10).

Summary:

1. Deduction u/s 80IB(10) on profit derived from the sale of unutilized FSI:

The Revenue contended that the profit from the sale of unutilized FSI is not derived from the business activity of development and construction of the housing project. However, the Tribunal upheld the CIT(A)'s decision, referencing the ITAT's decision in M/s. Shakti Corporation and others, which allowed the deduction u/s 80IB(10) even if the FSI was not fully utilized. The Tribunal noted that there is no requirement to fully utilize permissible FSI under the scheme of the provisions of Sec.80IB(10) and that the concept of selling unutilized FSI is imaginary and based on surmises and conjectures.

2. Ownership and approval of the housing project:

The Assessing Officer (AO) argued that the land did not belong to the assessee-developer, the approval by the local authority was not in the name of the assessee, and the beneficial ownership was also not in the name of the assessee. Therefore, the AO concluded that the assessee did not have exclusive domain over the project, leading to the rejection of the deduction claim u/s 80IB(10). The Tribunal, however, referred to the Gujarat High Court's decision in Radhe Developers, which stated that ownership of the land is not a prerequisite for claiming deduction u/s 80IB(10). The deduction is available to the entity developing and building the housing project, irrespective of land ownership.

3. Compliance with conditions prescribed u/s 80IB(10):

The CIT(A) allowed the deduction subject to the AO verifying that the assessee met the conditions laid down in the case of M/s. Shakti Corporation and others. The Tribunal found that the assessee fulfilled the prescribed conditions u/s 80IB(10), as discussed in the Radhe Developers case. The Tribunal emphasized that the assessee had developed the housing project at its own cost and risk, and had dominant control over the project, thus qualifying for the deduction.

Conclusion:

The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to allow the deduction u/s 80IB(10) on both counts. The Tribunal found no merit in the Revenue's arguments and upheld the CIT(A)'s appreciation of the conditions laid down in Radhe Developers.