TMI Blog2012 (7) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... laborate discussion and thereafter he has concluded that the land did not belong to the assessee-developer and that the approval by the local authority for the construction of the said housing project was not in the name of the assessee and that the beneficial ownership was also not in the name of the assessee, hence the assessee did not have the exclusive domain over the project. After assigning these reasons, AO has held that there was infringement of the provisions as prescribed u/s.80IB(10) of IT Act. An another reason for the disallowance as stated by the AO was that although the construction activity was carried out by the assessee but without fully utilizing the permissible floor space index (FSI). Resultantly, the claim of deduction u/s.80IB(10) was rejected. 3. The matter was carried before the first appellate authority and ld. CIT(A) has considered the requisite condition as prescribed u/s.80IB(10) and allowed the claim in the following manner:- 3.3. 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 has also b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity 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 the Development and Construction Agreements as well as Agreement for Sale, both dated 18/05/2000, extracted above we observe that, these two Agreements effectively transfer to the assessee-firm all the rights of development and construction and to deal with the land for a consideration payable within a stipulated time; that the assessee had been put in possession of the land on the terms and conditions as mentioned in these two Agreements; that the assessee-firm has also paid consideration of ₹ 56 lacs during the two Financial Years; i.e. 2000-01 2001-02; that the assessee-firm has to obtain necessary approvals from the local authorities; i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 two different entities would not make any difference. The deduction would be eligible to the person who is developing and building housing project and not to the mere owner thereof. 29. It is also the case of the Revenue that the assessee was a mere contractor developing and building housi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 individual buyer for each project and also there is no question of calculating the profitability on FSI as the same has not been contemplated u/s.80IB(10) of the Act. On verification of the sale deed executed in favour of buyers of the residential houses, it is clear that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ludes 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 as the ground level rights are already sold to prospective customer. In this situation it would be practically impossible to make either construction or to give access for construction made. Thus, the concept of element of unutilized FSI sold is imaginary and based on surmis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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