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TMI Blog2012 (11) TMI 1135X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect income and prays that your honour be pleased to hold so now and delete the addition/disallowances made. 2. The Learned Income Tax Officer has erred in law and on facts of the appellant's case in disallowing deduction u/s80-IB (10) of the I.T. Act 1961 amounting to ₹ 48,99,220/-on the erroneous plea that the appellant is not 'owner' of subject land. The appellant most humbly submit that both on facts of the case as well as in law the deduction u/s 80-IB (10) of the Act is allowable since all the conditions laid down in that section are fulfilled for granting the said deduction. In view thereof, the appellant prays that your honour be pleased to hold so now and delete the additions made. 3. The Learned Income Tax Officer has erred in law and on facts of the appellant's case in disallowing deduction u/s80-IB (10) of the I.T. Act 1961 amounting to ₹ 48,99,220/- on the erroneous plea that the area of the commercial construction in the housing projects exceeds the limit prescribed in the said section. The appellant most humbly submit that both on facts of the case as well as in law the deduction u/s 80-IB (10) of the Act is allowable since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.80IB(10), even commercial construction was much more than the limit prescribed in Clause (d) of subsection (10) of Section 80IB is allowable. The ld. A.O. had given reasonable opportunity of being heard, accordingly, the assessee s reply vid eletter dated 02.12.2008, which has been considered by the A.O. but the same had not been found convincing to him. After giving detailed reasoning on page nos.6 to 20, the ld. A.O. did not allow the deduction u/s. 80IB(10) of the IT Act. 4. The assessee carried the matter before ld. CIT(A), who has confirmed the addition. She has accepted the principle laid down in case of M/s. Radhe Developers Other vide order in ITA No. 2482/Ahd/2006 dated 29.06.2007and M/s. Shakti Corporation on ownership and profit derived on sale of unutilized F.S.I. Ld. CIT(A) has confirmed the addition on the ground that the assessee had to satisfied all the conditions laid down in Section 80IB(10)cumulatively. The Section 80IB(10) was amended w.e.f. 01.04.2005 for A.Y.05-06. There was a rider in clause (d) sub-section (10) of Section 80IB that the built up area of the shops and other commercial establishments included in the housing project does not exceed [thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t decision in case of Manan Corporation vs. ACIT (supra), is squarely applicable. Therefore, we allow the appeal in favour of the assessee. 7. Ground nos.4 5 are against holding by the A.O. that particularly profit shown by the assessee is related to share of F.S.I. is not income from building activity. Therefore, he calculated proportionate profit of F.S.I. at ₹ 39,27,168/-. The A.O. observed on page nos. 22 to 24 that the permission for construction of tenement and other units were given by the local authority to construct the units utilizing only the part of full permissible F.S.I. The permission was given to the original land owners to develop the housing projects as per approved lay out plan. In the approved lay out plan, the local authority had permitted to built residential unit of lesser area than the maximum permissible built up area on the land. Thus, the assessee firm had carried out only partial construction of the available F.S.I. vis- -vis the entire plot of land available for development with the assessee firm. Although the approved F.S.I. in regard to the units constructed had been fully utilized as per the approved plan of the local authority. But there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent agreement with the land owner, we find that here also the reference is with respect to land area only. In both the documents assessee had not acquired rights and has not relinquished rights with reference to FSI. Further, on verification of approved map for each unit is with reference to built up area only. Under the circumstances, the assessee has never dealt with FSI, both in terms of acquiring rights in the land and for relinquishment of such rights in the land. The calculation given in approved plan is of maximum permissible FSI and by giving such calculation it is not made mandatory by any provisions of any Act to make construction to the fullest extent of maximum permissible FSI. The utilization of FSI by the builder developer depends on many factors like situation of plot, the type of locality, and the type of buyers' affordability. It is the market force, which determines the average size of the residential unit - a commercial decision, which prevails for the purpose of carrying out the business and for making residential units and not the permissible maximum FSI. It would also be impossible to construct any housing unit as per the provisions of Sec. 80IB(10) by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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