Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘’SMC’’ BENCH, AHMEDABAD
Before: SHRI AMARJIT SINGH
(Applicant) (Responent) Assessee by : Shri Urvashi Shodhan, A.R : Revenue by Shri N.K. Goyal, Sr. DR सुनवाई क� तार�ख/Date of Hearing : 21/11/2019 घोषणा क� तार�ख /Date of Pronouncement: 20/02/2020 आदेश/O R D E R PER Ms MADHUMITA ROY, JUDICIAL MEMBER:
The instant appeal filed by the assessee is directed against the order dated 09.12.2016 passed by the Learned Commissioner of Income Tax(Appeals)-5, Vadodara arising out of the order dated 11.01.2016 passed by the Learned D.C.I.T Circle-1(2) Vadodara under section 143 (3 ) r.w.s 254 of the Income Tax Act, 1961 (hereinafter referred to as “the act”) for the Assessment Year 2007 2008.
2 2. The assessee has mainly challenged the disallowance of deduction under section 80IB(10) of the Act amounting to Rs.12,35,762/- The brief facts leading to the case is this that the assessee engaged in the business of land development and construction of housing project in the name of “Bal Gopal” filed its return of income for the Assessment Year 2007-08 disclosing total income at Rs. Nil after claiming deduction under section 80 I B(10) of the Act. The said assessment was finalized under section 143(3) of the Act by the Learned Assessing Officer on 14.12.2009 determining total income at Rs.54,53,349/- disallowing the entire deduction claimed under section 80IB(10) of the Act on the count that the appellant is not the owner, the commercial construction is more than the permissible limit and the assessee has not used the entire FSI available. In appeal the Learned CIT(A) allowed the claim of the appellant which was subsequently upheld by the Hon’ble Tribunal by and under its order dated 30.05.2014. However on the issue proportionate disallowance of deduction under section 80IB(10) of the Act for underutilization of FSI, the assessment has been set aside for fresh adjudication in view of the judgement passed by the Hon’ble jurisdictional High Court in the case of CIT versus Moonstar Developers reported in 45 taxmann.com 181. In appeal the Learned CIT(A) has been pleased to direct the Learned Assessing Officer to calculate allowable deduction under section 80IB(10) of the Act after 3 considering 30% permissible underutilization of FSI as indicated in the order itself. Disallowance to the extent of Rs.12,35,762 /-has been sustained on account of profit attributable to an utilized portion of FSI. The balance addition has consequently been deleted. Hence the instant appeal before us.
We have heard the respective submissions made by the parties, we have also perused the relevant materials available on records.
It is the case of the assessee that nowhere in the Income Tax Act it has been provided that the undertaking engaged in the business on development and construction of housing project should utilize the available FSI fully and therefore the revenue has proceeded on mere presumption and has worked out the so-called FSI sale and also worked out profit on estimated basis from such so-called FSI sale and has disallowed the deduction claimed proportionately. Further that in case of tenements construction of third-floor is not permissible as par prevailing GDCR and therefore out of total permissible FSI of 1600 Sq.ft., only 1280 Sq.ft. had been possible to be utilized. The assessee accepted that 32% of permissible FSI cannot be used in case of tenements construction. The appellant further relied upon the judgement passed by the jurisdictional High Court in the case of CIT versus Sheenath Infra reported in 44 taxmann.com 461 whereby it has been held that where under utilization of FSI 4 is marginal and if it is in the range of 25% to 30% no partial disallowance of deduction under section 80 I B(10) could be made.
We have carefully considered the order passed by the Learned CIT(A) wherefrom it appears that the judgement passed by the jurisdictional High Court in the case of Moonstar(supra ) has also been taken care of. The case of the assessee that the present case is different from the facts of the case of Moonstar (supra ) was also considered. In that particular case permissible construction has been carried out on entire permissible area at the ground level and only common areas have been left open. We have further considered the case of the assessee that in the case of flats, full FSI has been used but in the case of tenements full FSI could not be used because of Development Rules and Regulations and the admission on behalf of the assessee that in case of tenements since construction of third-floor is not permissible, about 32% of the permissible FSI could not be used even if the developer wants to use it. We further find that the Learned CIT(A) has taken into consideration the facts available in the matter of Shreenath Infrastructure as relied upon by the assessee and been able to differentiate the same with the fact available in the case of Moonstar Developers (supra). In the first case the assessee have been utilized 73.78% of available FSI and there was only marginal underutilization as compared to the assessee in the second matter when utilization of FSI was in 5 the range of 11.14% to 65.81%. Since in the instant case the assesses FSI utilization is 45.18% as noted by the Assessing Officer in para 2.8 of his order under section 143 (3 ) read with section 254 of the Act, the decision of the Hon’ble jurisdictional High Court has been found to be not applicable in the instant case. However upon taking into consideration the alternative plea raised by the assessee relying on the judgement passed by the Co-ordinate Bench passed in in the matter of M/s. Rudraksh Developers the assessee has been made eligible for proportionate disallowance under section 80 I B(10) of the Act after considering 30% permissible underutilization. Hence the Learned CIT(A) taking into consideration the entire aspect of the matter has been pleased to direct the Assessing Officer to calculate allowable deduction under section 80IB(10) of the Act after considering 30% permissible underutilization of FSI as indicated in the judgement passed by the Co-ordinate Bench in ITA No. 2127/Ahd/2011 in the matter of M/s. Rudraksh Developers of the Act to the extent of Rs.12,35,762/- on account of profit attributable to unutilized portion of FSI and balance addition has been pleased to be deleted which in our considered opinion is quite reasonable, rational, just and proper so as to warrant interference. We therefore, find no merit in the appeal preferred by the assessee. Hence, the same is dismissed.
6 5. The next ground of appeal against the decision of penalty proceeding under section 271(1)(c ) of the Act is premature and hence dismissed
The last ground of appeal relating to levy of interest under section 234 A/B/C is consequential in nature and no order need be passed.
In the result assesse’s appeal is dismissed.
Order pronounced in the Court on 20/02/2020 at Ahmedabad.