2013 (6) TMI 250 - AT - Income Tax

Claim u/s.80IB(10) disallowed - As per AO assessee has not utilised the fully permissible FSI - CIT(A) deleted the addition - Held that - There is nothing in the provision to suggest that there is a necessity that entire permissible FSI on the plot of land has to be consumed. It is prerogative of builder to consume the FSI on the plot and there are various factors which are in the domain of builder itself. There is nowhere envisaged in the law that the entire FSI should be utilised for the purpose of claiming deduction u/s.80IB(10). The assessee s size of the plot as per completed building plan is 7638 sq.mt. and permissible built up area was 4569 sq.mt. which is more than 1 acre (4047 sq.mt.). Secondly, the approval to construct from the local authority is 21.06.2003 which is after 01.10.1998. Thirdly, the residential unit developed and built up area of 300 sq.ft. per unit which is less than 1500 sq.ft. as applicable to Nashik, and lastly the construction has been completed as per the completion certificate on 04.11.2006 which is before 31.03.2008. Thus all the conditions have been complied by the assessee for claiming deduction u/s.80IB(10) on the housing project. AO was not justified in rejecting the claim on the ground that assessee has not utilised the fully permissible FSI - appeal filed by the Revenue dismissed.

Summary

Issues:
1. Disallowance of claim u/s.80IB(10) of the Act by the AO.
2. Completion of housing project at Chunchale Shivar before the deadline.
3. Disagreement between CIT(A) and Assessing Officer regarding claim fulfillment.

Analysis:
1. The appeal was filed by the Revenue against the CIT(A)'s order regarding the disallowance of the assessee's claim u/s.80IB(10) of the Act. The Assessing Officer contended that the project was not completed by the deadline as the entire buildable area was not utilized during the year, leading to the disallowance of the claim of Rs.33,49,895/-.

2. The CIT(A) allowed the claim of the assessee, stating that all conditions u/s.80IB(10) were fulfilled. The size of the plot, approval date, built-up area, and completion date were all in compliance with the requirements. The Assessing Officer's argument that the entire permissible FSI should be consumed for the deduction was rejected, as there is no such stipulation in the law.

3. The Tribunal found that the builder has the discretion to consume the FSI on the plot, and the law does not mandate the full utilization of FSI for claiming the deduction u/s.80IB(10). As the assessee met all the main conditions of the section, the claim was deemed valid. The CIT(A) was justified in directing the Assessing Officer to allow the claim, as there was no legal basis for rejecting it. Consequently, the appeal filed by the Revenue was dismissed.

4. The Cross Objection, supporting the CIT(A)'s order, became inconsequential due to the decision in favor of the assessee in the Revenue's appeal. Thus, both the appeal of the Revenue and the cross objections were dismissed, upholding the CIT(A)'s decision.