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TMI Blog2012 (10) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... even if the unutilized FSI rights are available with the assessee, it is the only way left out of utilizing such unutilized FSI is to make construction on top of the ground floor, which is already being sold to prospective buyers, and this concept of element of unutilized FSI sold is imaginary and based on surmises and conjectures - Decided in favor of assessee - I.T.A. No.48/Ahd/2010 - - - Dated:- 13-7-2012 - SHRI MUKUL Kr.SHRAWAT AND SHRI T.R. MEENA, JJ. Appellant by : Shri Roopchad, Sr.D.R. Respondent by : Shri Manish J.Shah ORDER PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER : This is an appeal filed by the Revenue arising from the order of Learned CIT(Appeals)-II, Baroda dated 16.10.2007 and the effective grounds are ground No.1 ground No.7; reproduced below:- 1. On the facts and in the circumstances of the case and in law, the ld.CIT(Appeals) erred in allowing the deduction u/s.80IB(10) to the assessee, who was not granted approval by the local authority to carry on the business of an undertaking developing and building housing projects, in contravention of a plain reading of section 80IB(10) r.w.s. 80IB(1), Explanation to section 80IB(10) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property as firm s property by operation of the partnership law. The Supreme Court in Sunil Siddharthbhai Vs. CIT [1985] 156 ITR 509 held that a conversion of an exclusive interest into a shared interest constitutes a transfer. Further with regard to the terms of the development agreement with Shri Rashmikant Jayashankar Bhatt the following point emerge:- The payment term of 33 months is specified The right of obtaining permission to construct and carry out all the activities, as per such permission will be of the appellant. To make advertisement, to issue receipt for the sale consideration to customers, to enter into agreement to sell was the responsibility of the appellant. It will be the duty of the appellant to obey the condition of approved plan. To appoint architect, engineers, supervisors, contractors etc., and it will be responsibility of the appellant to pay remuneration to them. To purchase all the materials for construction and the bills shall be in the appellant s name and it will be responsibility of the appellant to pay for it. To collect consideration from members in the appellant s name and issue receipts and it will be responsibility to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour as per the following paragraphs:- 5. Learned DR in the written submission contends that ratio laid down in the case of Radhe Developers and others is not applicable to the facts of present case and salient features of the facts as existed in Radhe Developer s decision are as under: i) There is no agreement to sale in favour of the assessee as existed in the case of Radhe Developers and others. ii) There is no evidence that sale consideration is paid to land owner by the assessee as existed in the case of Radhe Developers Others. iii) The land owners have sold the pieces of land to unit holders directly and the assessee had acted merely as a conformity partly. iv) The assessee firm has entered into construction agreement with the unit holders and thus it acted as a contractor. v) The assessee firm has never sold the house to the unit holders. vi) There is no evidence to indicate that all approvals permission were obtained by the assessee firm as an agent or a power of attorney of land owners. 6. Further attention was drawn to Para 18 of ITAT order and contended that the same is foundation of the decision which reads as under: 18. From the clauses of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as contained in paras-28, 29, 45 and 63 to 65 of the order are as under: 28. The contention of the Revenue Authorities that to claim deduction u/s.80IB(10), there is a condition precedent that the assessee must be owner of the land on which housing project is constructed has no force. We do not find any such condition as appearing in the provisions of the section extracted above. A plain reading of sub-section (10) of Sec.80IB reveals and makes it evident that there must be an undertaking developing and building a housing project as approved by a Local Authority. It does not have any further condition that such development and building of the housing project should also be on a land owned by an assessee undertaking. It might be true that the land belongs to the persons who has entered into an agreement with the assessee to develop and build housing project but on a perusal of the agreement as narrated above, it is evident that the development and building work has been carried out by the assessee in pursuance of a tripartite agreement and it is not by the land owners. Therefore, the mere fact that the land-owner and the undertaking developing and building housing project, are tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on surmises and conjectures. Paragraph-63 to 65 of the above Tribunal order is reproduced hereinbelow for the sake of convenience: 63. In the cases of M/s.Deep Developers (ITA Nos.2444/ Ahd/2006), M/s.Dhara Developers (ITA No. 2445/Ahd/ 2006), M/s.Pramukh Associates (ITA 2824/Ahd/2006), M/s. Aashiyana Developers (ITA 2816/Ahd/2006), M/s.Bhakti Construction (ITA No 2818/Ahd/2006), M/s.Super Construction (ITA No 2820/Ahd/2006), M/s.Subham Associates (ITA No 2821/Ahd/20060, M/s.Avani Traders (ITA No 2822/ Ahd/2006), M/s. Kismat Construction (ITA No 2823/Ahd/ 20060, M/s. Rutu Developers (ITA No 2856/Ahd/2006) and M/s.Sahjanand Developers (ITA No 672/Ahd/2007), a question has also been raised by the Revenue that the profit earned by the assessee are not for developing and building housing project alone but for the sale of extra FSI, which has not been utilized for developing and building housing project. On a perusal of the provisions of Sec.80IB(10), we find that it is not mandatory requirement to fully utilize permissible FSI; there is no condition as to FSI under the scheme of the provisions of Sec.80IB(10) of the Act; there is no question of selling unused FSI to the individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under section 80IB of the Act have no force; that the assessees have claimed deduction under section 80IB of the Act for the profit derived during the year under consideration from the business of development and construction of a housing project which though includes profit earned from sales of unutilized FSI of the housing project also and that the other part of unutilized FSI relating to the approved units have not been constructed or developed but being sold directly, although as a unrestrictive bundle of rights attached with the sale of land plot. As aforesaid, there is no requirement as to the FSI under the scheme of provisions of Sec. 80IB(10). In any case the assessee has not sold FSI of plot, even if the unutilized FSI rights are available with the assessee, it is the only way left out of utilizing such unutilized FSI is to make construction on top of the ground floor, which is already being sold to prospective buyers. With this so called unutilized FSI rights, if the assessee wishes to make further construction then it will practically impossible as the assessee is left with no Easement rights for making construction or access to go on top of the ground floor a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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