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2014 Supreme(Guj) 447
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
AKIL KURESHI and SONIA GOKANI, JJ.
THE COMMISSIONER OF INCOME TAX-I - Appellant(s)
Versus
MOON STAR DEVELPERS - Opponent(s)
TAX APPEAL NO. 549 of 2008
With
TAX APPEAL NO. 489 of 2009
With
TAX APPEAL NO. 492 of 2009
With
TAX APPEAL NO. 323 of 2009
With
TAX APPEAL NO. 317 of 2009
With
TAX APPEAL NO. 304 of 2009
With
TAX APPEAL NO. 1711 of 2008
With
TAX APPEAL NO. 1490 of 2008
With
TAX APPEAL NO. 581 of 2008
With
TAX APPEAL NO. 577 of 2008
With
TAX APPEAL NO. 574 of 2008
With
TAX APPEAL NO. 573 of 2008
With
TAX APPEAL NO. 572 of 2008
With
TAX APPEAL NO. 570 of 2008
With
TAX APPEAL NO. 568 of 2008
With
TAX APPEAL NO. 566 of 2008
With
TAX APPEAL NO. 565 of 2008
With
TAX APPEAL NO. 561 of 2008
With
TAX APPEAL NO. 558 of 2008
With
TAX APPEAL NO. 557 of 2008
With
TAX APPEAL NO. 556 of 2008
With
TAX APPEAL NO. 555 of 2008
With
TAX APPEAL NO. 554 of 2008
With
TAX APPEAL NO. 553 of 2008
With
TAX APPEAL NO. 552 of 2008
With
TAX APPEAL NO. 550 of 2008
With
TAX APPEAL NO. 1709 of 2010
With
TAX APPEAL NO. 1492 of 2010
With
TAX APPEAL NO. 1156 of 2010
With
TAX APPEAL NO. 1051 of 2010
With
TAX APPEAL NO. 2228 of 2009
With
TAX APPEAL NO. 1681 of 2009
With
TAX APPEAL NO. 1424 of 2009
With
TAX APPEAL NO. 1312 of 2009
With
TAX APPEAL NO. 1311 of 2009
With
TAX APPEAL NO. 1273 of 2009
With
TAX APPEAL NO. 1272 of 2009
With
TAX APPEAL NO. 1265 of 2009
With
TAX APPEAL NO. 1229 of 2009
With
TAX APPEAL NO. 445 of 2009
With
TAX APPEAL NO.495 OF 2009
Decided on: 11/03/2014
MR MR BHATT with MRS MAUNA BHATT and MR KM PARIKH, ADVOCATES for the Appellant(s)
MR SN SOPARKAR, SR. ADV. WITH MR B.S. SOPARKAR, ADVOCATES for the Opponent(s)
Headnote:
Income Tax Act, 1961 - Section 80IB(10) - Transfer of Property Act -Section 2(47)(v) and 53A - Deduction of Tax - Whether in facts and circumstances of case, Income Tax Appellate Tribunal was right in law in holding that full deduction under section 80IB(10) of Act was available to assessees even though construction was carried out only utilising portion of FSI available - Held, 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 utilisation of the FSI is way short of permissible limits cannot be said to have been derived from such housing project. Terms "derived from", "arising out of" and "attributable to" are often times used in the context of income tax in different connotation. In the case of Sterling Foods (supra), the assessee was engaged in processing prawns and other sea food which it exported. In the process, the assessee earned import entitlements to use itself or sell the same to others. During the year under consideration, the assessee included such sale proceeds for claiming relief under section 80HH of the Act, in case of any profit or gain derived from an industrial undertaking in backward areas- Appeal allowed -
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. In this group of appeals, two questions are raised by the Revenue for our consideration. The first issue is with respect to the claim of deduction by the respondents-assessees under section 80IB(10) of the Income Tax Act,1961 (‘the Act’ for short). The assessees are developers. They had developed housing projects fulfilling the conditions contained in section 80IB(10) of the Act and claimed deduction on the profits so earned from sale of such housing projects. The Revenue was of the opinion that the land on which the housing project was constructed was not owned by the assessees and the development permission by the local authority was given in the name of the landowners and not the assessees. On such grounds, the Assessing Officer declined to grant the benefit of deduction under section 80IB(10) of the Act, instead treating the assessees as a works contractors. Such issues reached the Income Tax Appellate Tribunal (‘the Tribunal’ for short). The Tribunal ruled in favour of the assessees. The Revenue thereupon filed further appeals before the High Court. In the case of CIT v. Radhe Developers, 341 ITR 403 (Guj.), this Court dismissed the Revenue’s appeals and confirmed the view of the Tribunal. We would take note of the relevant portion of such judgment at a later stage.
2. The second issue also arises out of the assessees’ claim for deduction under section 80IB(10) of the Act. The Assessing Officer in addition to raising objection to the entire claim of the assessees for deduction under section 80IB(10) of the Act further noticed that the assessees had not utililzed the full extent of the Floor Space Index (FSI for short) of the land in question. After putting the assessees to notice and eliciting their response, the Assessing Officer, concluded that the profit which could be relatable to the sale of unutilized FSI cannot be stated to have been derived from the assessees activity of development and construction of a housing project. Proportionate profit, therefore, reflected in the assessees income from the sale of residential units was taken out from eligible deduction under section 80IB(10)of the Act. The Tribunal on this issue also ruled in favour of the assessees. The Revenue, therefore, raised this additional question in these appeals. In Tax Appeals Nos.549/08, 552/08, 553/08, 554/08, 556/08, 557/08, 558/08, 561/08, 565/08, 566/08, 568/08, 570/08, 572/08, 573/08, 574/08, 577/08, 581/08 though such issue arises, at the time of admission of the appeals, question relatable to this issue was not framed though it does arise out of respective judgment of the Tribunal. We therefore permit the Revenue to raise such additional question in such appeals. In other appeals, such an additional question has already been framed. For the purpose of all these appeals, therefore, we adopt the following common substantial question of law for our consideration:
“Whether in the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that full deduction under section 80IB(10) of the Act was available to the assessees even though the construction was carried out only utilizing a portion of FSI available?”
3. We may first, deal with issue No.1 which is possible of summary disposal since the issue is already covered by a decision of this Court in the case of Radhe Developers (supra). Under identical circumstances, this Court upheld the assessees claim for deduction under section 80IB(10) of the Act making following observations:
“31. Neither the provisions of Section 80IB nor any other provisions contained in other related statutes were brought to our notice to demonstrate that ownership of the land would be a condition precedent for developing the housing project. It was perhaps not even the case of the Revenue that under the other laws go
