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2015 (2) TMI 575 - AT - Income TaxDeduction u/s.80IB(10) - disallowance as Assessee is not a developer but is a contractor - Held that - As far as the issue with respect to 80IB(10) with respect to the land being not in the name of the Assessee is concerned, it is now settled by the decision of Hon ble Gujarat High Court in the case of Radhe Developers 2011 (12) TMI 248 - GUJARAT HIGH COURT wherein has held ownership of property is not a condition precedent for grant of deduction because there is nothing in section 80IB(10) of the Act requiring that the ownership of land must vest in a developer for him to be able to qualify for deduction. - Decided in favour of asssessee. Non utilizing the FSI available for the construction of the housing project fully - Held that - As far as the issue with respect to unutilized FSI is concerned, we find that Assessing Officer while denying the deduction u/s. 80IB(10) has noted that out of the total FSI of 8000.27 s.q. mts available with Assessee, the FSI that has been consumed is to the extent of 1310.02 sq. mts (which works out to around 17% of the total FSI) and the FSI unutilized is to the extent of 6690.25 sq. mts. We further find that in the decision of Hob ble Gujarat High Court in the case of Shreenath Infrastructure 2014 (4) TMI 482 - GUJARAT HIGH COURT , the underutilization of FSI as noted by Hon ble Gujarat High Court was in the range of 25 to 30 % and therefore the ratio of decision in the case of Shreenath Infrastructure, which has been relied by ld. A.R. would not be applicable to the facts of the present case. We further find that while denying the issue, ld. CIT(A) has given no finding with respect to the unutilized FSI. We therefore feel that the issue of unutilized FSI and thereby the deduction u/s. 80IB (10) on the unutilized FSI needs to be re-examined at the end of CIT(A) in view of the decision of Hon ble Gujarat High Court in the case of Moon Developers (2014 (4) TMI 1042 - GUJARAT HIGH COURT). We therefore remit the issue to the file of CIT(A) to decide the issue afresh as per law and after giving adequate opportunity of hearing to both the parties. - Decided in favour of revenue for statistical purposes.
Issues Involved:
1. Eligibility for deduction under Section 80IB(10) of the Income Tax Act. 2. Deduction on profit derived from the sale of unutilized Floor Space Index (FSI). Comprehensive, Issue-Wise Detailed Analysis: 1. Eligibility for Deduction under Section 80IB(10): The Assessee, a partnership firm engaged in building construction, filed its return for A.Y. 2006-07 declaring a total income of Rs. Nil after claiming a deduction of Rs. 8,26,505/- under Section 80IB(10) of the Income Tax Act. The Assessing Officer (A.O.) disallowed the deduction on the grounds that the housing project was not approved in the name of the Assessee but in the name of the landowner, and the land was not owned by the Assessee. The A.O. argued that as per Section 80IB(10), the approval of the housing project should be in the name of the undertaking developing it, and the land should be owned by the Assessee. The CIT(A) allowed the Assessee's appeal, stating that the Assessee had control over the land and bore the risks and costs involved in the project, making it eligible for the deduction. The CIT(A) relied on the decision of the ITAT in the case of Shakti Corporation and the Hon'ble Gujarat High Court in the case of Radhe Developers, which held that ownership of the land is not a condition precedent for claiming the deduction. 2. Deduction on Profit Derived from Sale of Unutilized FSI: The A.O. also disallowed the deduction on the grounds that the Assessee had not fully utilized the permissible FSI and had sold the unutilized FSI, which he argued could not be considered as profit derived from the business activity of developing and constructing the housing project. The CIT(A) disagreed, following the ITAT's decision in the case of Radhe Builders, and directed the A.O. to allow the deduction. However, the Revenue appealed, arguing that the Assessee was not eligible for the deduction on the unutilized FSI based on the Hon'ble Gujarat High Court's decision in the case of Moon Star Developer, which stated that significant under-utilization of FSI cannot qualify for the deduction under Section 80IB(10). The Tribunal found that the Assessee had utilized only 17% of the available FSI and remitted the issue back to the CIT(A) for re-examination in light of the Moon Star Developer decision, directing the CIT(A) to decide the issue afresh and provide adequate opportunity for both parties to present their cases. Conclusion: The Tribunal allowed the Revenue's appeal for statistical purposes, remitting the issue of unutilized FSI back to the CIT(A) for re-examination and directing the CIT(A) to provide a detailed finding on the matter in accordance with the law and relevant judicial precedents. The Assessee was instructed to furnish all required details promptly. The judgment emphasized the necessity of a case-by-case analysis for under-utilization of FSI and the need for specific findings to justify the deduction under Section 80IB(10).
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