2015 (8) TMI 1017 - AT - Income Tax

Eligibility of deduction u/s 80IB(10) - profit derived from sale of unutilized FSI - whether not being the element of profits derived from the business activity of development and construction of the housing project - CIT(A) allowed deduction - Held that - As decided in assessee s own case for A.Y 2007-08 2010 (8) TMI 928 - ITAT AHMEDABAD concluded that the respective assssees had dominant control over the projects and developed the land at their own risk and costs and therefore, were eligible for deduction u/s 80IB(10) of the Act. See M/s. Sahkti Corporation case 2008 (11) TMI 436 - ITAT AHMEDABAD and M/s. Radhe Developers 2007 (6) TMI 316 - ITAT AHMEDABAD - Decided against revenue. Addition u/s. 40(a)(ia) - disallowance of payment to contractors - TDS not deposited within the time prescribed - CIT(A) deleted disallowance - Held that - The provision of Section 40(a)(ia) has wrongly been invoked in the case of the assessee, therefore, the disallowance of expenditure was wrongly made as the amended provisions of section 40(a)(ia) are to be due date of filing of the return and thus no disallowance should be made. We hereby affirm the view taken by learned CIT(A). This ground of the Revenue is hereby dismissed. - Decided against revenue.

Summary

Issues:
1. Allowance of deduction under Section 80IB(10) for profit derived from the sale of unutilized FSI.
2. Disallowance of payment to contractors under Section 40(a)(ia) for delayed TDS deposit.

Analysis:

Issue 1: Allowance of deduction under Section 80IB(10) for profit derived from the sale of unutilized FSI:
1.1 The Revenue challenged the deduction claimed by the assessee under Section 80IB(10) for profit derived from the sale of unutilized FSI, contending it was not part of the business activity of development and construction of the housing project.
1.2 The CIT(A) relied on a decision by ITAT 'D' Bench, Ahmedabad, which held that the assessee had dominant control over the project and developed the land at their own risk and cost, making them eligible for the deduction under Section 80IB(10).
1.3 The CIT(A) applied the above decision to the current case and allowed the deduction under Section 80IB(10) for the assessee.
1.4 The Revenue cited an order by ITAT 'A' Bench, Ahmedabad, in the case of M/s. Shikhar Developers, proposing guidelines for verifying deduction claims under Section 80IB(10) based on which directions could be issued for this case.

Issue 2: Disallowance of payment to contractors under Section 40(a)(ia) for delayed TDS deposit:
3.1 The AO disallowed a payment of &8377; 22,44,480 to a contractor due to delayed TDS deposit, as the TDS was paid after the prescribed time. However, the CIT(A) ruled in favor of the assessee, citing a decision of the Calcutta High Court in the case of Virgin Creations.
4. The ITAT Ahmedabad consistently followed the decisions of the Calcutta High Court and the Gujarat High Court regarding disallowance under Section 40(a)(ia) based on the due date of filing the return, leading to the dismissal of the Revenue's ground for disallowance in this case.

In conclusion, the ITAT Ahmedabad upheld the CIT(A)'s decision to allow the deduction under Section 80IB(10) for the profit from the sale of unutilized FSI and dismissed the Revenue's appeal regarding the disallowance of payment to contractors under Section 40(a)(ia) due to delayed TDS deposit.