2013 (6) TMI 437 - AT - Income Tax

Deduction u/s. 80IB(10) - proceeds attributable to the sale of unutilized FSI - Held that - The issue is covered in favour of the assessee as relying on Radhe Developer (2007 (6) TMI 316 - ITAT AHMEDABAD) in respect of unutilized FSI to held that concept of element of unutilized FSI sold is imaginary and based on surmises and conjectures. In favour of assessee.

Summary

Issues:
Appeal against order allowing deduction u/s. 80IB(10) for the sale of unutilized FSI instead of dwelling units in housing projects.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad concerned the Revenue challenging the order of the Ld. Commissioner of Income-tax (Appeals)-II, Baroda regarding the deduction u/s. 80IB(10) for the assessment year 2006-07. The Revenue contended that the deduction was erroneously allowed for the proceeds attributable to the sale of unutilized FSI instead of the dwelling units in the housing projects. The Tribunal noted that the assessee did not appear but had submitted written arguments. The facts revealed that the Assessing Officer disallowed the deduction claimed u/s. 80IB(10) and u/s. 40A(a)(ia) of the Income Tax Act during the scrutiny assessment. The Ld. CIT(A) allowed the deduction u/s. 80IB(10) following a decision of a co-ordinate Bench and confirmed the disallowance u/s. 40A(a)(ia). The Revenue appealed against this order.

The Revenue, through its Ld. DR, relied on the Assessing Officer's order, while the assessee pointed out a similar issue decided in their favor by the ITAT Ahmedabad for another assessment year. The ITAT had previously held that the profit derived from the sale of unutilized FSI was within the scope of section 80IB(10) and not limited to the sale of dwelling units. The ITAT considered the decision in the case of Radhe Developer and upheld the assessee's position, stating that the concept of unutilized FSI sold being outside the scope of section 80IB(10) was unfounded. The Tribunal found no fault in the Ld. CIT(A)'s order and dismissed the Revenue's appeal, citing the precedent set by the decision in the case of Radhe Developer.

In conclusion, the Tribunal upheld the Ld. CIT(A)'s decision to allow the deduction u/s. 80IB(10) for the sale of unutilized FSI, following the precedent established in the case of Radhe Developer. The appeal filed by the Revenue was dismissed, affirming the position that the profit derived from the sale of unutilized FSI was eligible for the deduction under section 80IB(10) as per the relevant legal provisions and judicial interpretation.