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TMI Blog2015 (2) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before us and has raised the following ground:- 1. On the facts and in the circumstances of the case and in law, the Id CIT (Appeals) erred in directing the Assessing Officer to allow the deduction u/s.80IB(10) r.w.s.80IB(l0) of the Incometax Act to the assessee in view of the decision of the Hon'ble ITAT in the case of M/s.Radhe Developers in ITA No.2482/Ahd/2006 dated 29.06.2007, without appreciating that the approval by the local authority as well as completion certificate was not granted to the assessee but to the landowner and the rights and the obligations under the said approval were not transferable, and that transfer of dwelling units in favour of the end-users was made by the landowner and not by the assessee. 2. On the facts and in the circumstances of the case and in law, the Id CIT (Appeals) erred in directing the Assessing Officer to allow the deduction u/s.80IB(10) r.w.s.80IB(l0) of the Incometax Act to the on profit derived from sale of unutilized FSI, without appreciating that this profit not an element of v profits derived from the business activity of development and construction of the housing project relating to the sale of tenements. 4. Though Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed FSI which cannot be considered as being eligible for deduction. He accordingly denied the deduction u/s. 80IB(10) on both counts. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) allowed the claim of the Assessee by holding as under:- 2.3 I have considered the submissions of the Authorized Representative and the order of the Assessing Officer. The decision of the Hon'ble ITAT in M/s. Shakti Corporation and Others and the guidelines laid down have also been considered. The matter was referred to the Assessing Officer who vide remand report dated 08.04.2010 has stated that "the land in question was originally belonged to Smt. Kashiben Gordhanbhai Patel & Others, in whose names permission for development was granted by the Local Authority. The said land was not transferred in the name of the assessee firm i.e. M/s. Dhara Developers. The assessee has made a total payment of Rs. 22,40,000/- for the said land admeasuring 4270 sq. mtr. and made a Development Agreement dated 14.05.2003 with Shantilal & Patel, power of attorney holder of land owners for development of housing project. As per the Development Agreement, the assessee is responsible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submitted that Hon'ble Gujarat High Court in the case of CIT vs. Shreenath Infrastructures (2014) 44 Taxmann. com 461 (Guj) has held that in every case of marginal under utilizing of FSI would not be a case of disallowance of deduction u/s. 80IB(10). She also placed on record the copy of the aforesaid decision. She therefore submitted that in view of the aforesaid decisions of Hon'ble Gujarat High Court, the Assessee was eligible for deduction under 80IB(10) and therefore the order of ld. CIT(A) be upheld. 9. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to disallowance of deduction u/s. 80IB(10). A.O had disallowed the deduction u/s. 80IB(10) on mainly two counts namely that Assessee is not a developer but is a contractor and secondly Assessee had not fully utilized the FSI available for the construction of the housing project. 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 where the Hon'ble Gujarat High Court has held ownership of proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits arising out of such activity and that arising out of the net sell of FSI must be resorted to. In the present case, none of the assessees have made any special ground for non-utilization of the FSI. 32. The contention of the counsel for the assessee that as long as there has been 100% utilization of the maximum permissible area on the ground floor, deduction under section 80IB(10) of the Act cannot be declined, cannot be accepted. As noted earlier, in case of M/s. Moon Star Developers and many other assesses, such full utilization of the ground floor area available for construction resulted into barely 20% to 25% of the FSI being used, remaining more than 75% being left unused. 33. What is available for deduction under section 80IB(10) of the Act is the profit of an undertaking derived from developing and building a housing project. Mere sale of open land or unused FSI as part of the housing project where utilization of the FSI is way short of permissible limits cannot be said to have been derived from such housing project. 11. In the present case, we find that CIT(A) while allowing the claim of deduction on the issue that the Assessee is not the owner of land is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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