Income Tax Officer, Ward-1(1), Bharuch, Bharuch V. M/s. Samruddhi Developers, Bharuch

ITA 235/SRT/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1543 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-07-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 14-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Question of law; Reason to believe
• Section: 148; 143(3); 142(1); 80IB; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A.L.SAINI, AM आयकरअपीलसं./ITA No.235/SRT/2020 (िनधाŊरणवषŊ / Assessment Year: (2010-11) (Virtual Court Hearing) Income Tax Officer-1(1), 1 st Floor, Harikunj Building, Above Bank of Baroda, Station Road, Bharuch-392001 Vs. M/s Samruddhi Developers G-7,Indraprastha Apartment, Zadeshwar Road, Bholav, Bharuch ̾थायीलेखासं./जीआइआरसं./PAN/GIR No.: ABJFS 1223 M (Assessee ) (Respondent) Assessee by : Shri Mukund Bakshi, C.A Respondent by : Shri Anurag Dubey Sr-DR सुनवाईकीतारीख/ Date of Hearing : 20/07/2022 घोषणाकीतारीख/Date of Pronouncement : 06/10/2022 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the Revenue, pertaining to assessment year 2010- 11, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-3, Vadodara, [for short ‘Ld.CIT(A)’] dated 17.09.2020, which in turn arises out of an order passed by the Assessing Officer u/s 143(3) r.w.s 147 of the Income Tax Act, 1961 (in short ‘the Act’), dated 26.12.2017. 2. The grounds of appeal raised by the Revenue are as follows:- “1. On the facts and circumstances in the case and in law, the Ld. CIT(A) erred in deleting disallowance of Rs.2,90,05,475/- claimed as deduction u/s 80IB(10) of the IT Act, thereby ignoring the fact that assessee was not entitled for claiming deduction u/s 80IB(10) of the IT Act as a whole, in view of the fact that in assessee’s case, there were two separate agreements for sale of plot and construction on the plot and there was no sale of constructed house and thus, assessee had merely acted as a contractor of the unit owner in respect of construction of house and therefore, not entitled to deduction u/s 80IB(10) of the Act because the sub section does not apply to a developer of a plotting scheme or a contractor. 2. On the facts and circumstances in the case and in law, the Ld. CIT(A) ITAT have committed patent error in restricting the profit on sale of unutilized FSA at Page | 2 ITA No.235/SRT/2020 A.Y.2010-11 M/s Samruddhi Developers 10.41% as against 36.87% worked out by the A.O contrary to the judgment of Hon'ble High Court in the case of Moon Star Developers reported in 45 taxmann.com. 181 being ratio decedent”. 2.2 On the facts and circumstances in the case and in law, the Ld. CIT(A) erred in deleting the disallowance u/s 80IB of the Act of Rs.76,74,800/- out of Rs.1,06,94,319/- by restricting the disallowance at 10.41% without appreciating that the assessee during the course of appellate proceedings did not furnish the manner of working /arriving the figure of disallowance at 10.41% being profit on sale of unutilized FSI. 3. The assessee craves to add to, amend or alter the above ground as may be deemed necessary. 3. Succinct facts are that assessee before us is a partnership firm. The assessee`s assessment for the year under consideration for assessment year 2010- 11 was re-opened by issuing notice u/s 148 of the Act, dated 27.03.2017. Subsequently notice u/s 142(1) was issued on 14.07.2017 and duly served upon the assessee. In response, vide assessee`s submission dated 29.08.2017, the assessee has requested to treat the return of income filed on 28.08.2010, be the return of income (ROI) filed against notice u/s 148 of the Act. Notice u/s 143(2) was issued on 29.08.2017 and served upon the assessee and copy of reasons recorded has also been supplied to the assessee along with the notice. The assessee, vide letter dated 07.11.2017 has filed objection against re-opening of assessment u/s 148 of the Act. The reasons recorded for reopening the assessment is reproduced below: “In this case, the assessee had e-filed its return of income on 28.08.2010 declaring total income at Rs. Nil, after claiming deduction u/s. 80IB of the Act of Rs.2,90,05,475/- under chapter VIA. However, in the instant case, assessment order u/s 143(3) for the AY.2011-12 has also been completed by making disallowance on account of deduction u/s.80IB(10) of Rs.1,11,91,329/-. Against the order passed u/s 143(3), the assessee had preferred an appeal before the CIT(A). The Ld. CIT(A)-3, Vadodara, vide order CAN/A(A)-3/433/2014-15 dtd. 27.7.2016 has confirmed the disallowance of Rs.45,23,535/- out of total disallowance made Rs.1,11,91,329/-. Further, aggrieved over the decision of the Ld. CIT(A)-3, Vadodara, the department has filed an appeal before the Hon'ble ITAT, Ahmedabad, which is pending. From this fact, the assessee is not eligible for deduction u/s.80IB(10) as claimed in the returned of income, under the circumstances it is concluded that claimed u/s. 80IB(10) of Rs.2,90,05,475/- has escaped assessment within the meaning of section 147 of the Act 1961. Page | 3 ITA No.235/SRT/2020 A.Y.2010-11 M/s Samruddhi Developers In view of the above, fact, I have reason to believe that the income chargeable to tax of Rs.2,90,05,475/- has escaped assessment for the AY 2010-11 within the meaning of section 147 of the IT Act, 1961. I am therefore, satisfied that the case is fit for issuance of notice u/s. 148 of the Act.” 4. The objection filed by the assessee against re-opening of assessment u/s 148 of the Act has been disposed of by the assessing officer, vide page no. 2 to 5 of assessment order. The order dated 10.11.2017 disposing of the objection filed by the assessee has been duly served upon the assessee. 5. After this, assessing officer has issued notice u/s 142(1) of the Act, dated 05.12.2017 on the assessee, which is reproduced below: “5.1 “Asper the chart submitted by assessee and sanction letter of local authority regarding allocated FSI, assessee is requested to show cause as to why percentage of unutilized FSI should not be treated as 36.87” 5.2 “On examination of the submissions made by you, it is observed that you have claimed deduction u/s 80IB(10) of the Act amounting to Rs.2,90,05,475. All the conditions laid down in section 80IB(10), just as those in section 80IB(3) to 80IB(11)and 80IB(11A) and 80IB(11A) of the Act, have to be satisfied by the assessee referred to Section 80IB(1) of the Act. These conditions are as under: (i) The gross total income of the assessee should include the profits from the business of an undertaking developing and building housing projects. (ii) The housing project should be approved by the local authority (iii) The project should be on the size of a plot of land which has a minimum area of one are. (iv) The residential units under the project should have a maximum built up area of 1000 sq.ft in Delhi or Mumbai and of 1500 sq.ft in any other place. On examination of the submission made by you it is seen that, you have not developed the entire project, with a size of land which has a but had entered into contract agreement with small plot owners and developed and constructed units as per the specification provided by the small land owners. No even a single unit has a minimum area of one are. You are requested to show cause as to why amounting to Rs.2,90,05,475 should not be disallowed and added back with your total income, Further reliance is placed on the recent judgment of the Hon'ble High Court of Gujarat in the case of 'Moonstar developers and others' pronounced on 5.3.2014 and on 11.3.2014, wherein it has been held that the portion of profit pertaining to the unutilized F.S.I is not allowable u/s 801B(10) of the Act. In view of the above you are again requested to furnish the details if unutilized F.S.I and corresponding profit details for untilised F.S.I such as, 1. Total FSI available for Page | 4 ITA No.235/SRT/2020 A.Y.2010-11 M/s Samruddhi Developers development, 2. FSI Consumed for development, 3.Cost of FSI Consumed, 4.Cost of FSI Unutilised, 5.Working of Net profit relevant to unutilized FSI for the FY 2009-10. As this is a time barring assessment, no adjournment in this regard is entertained" 6. In response to the above show cause notice, the Assessee has attended the office of assessing officer on 06.12.2017 and stated that they have constructed balcony space(covered) and wash area, road, common plot, office building of society, for the purpose of use of customer only. All the above facilities are part of the residential housing project and the above facilities are covered in the VF allocated by the local authority, assessee has produced the copy of judgment in the case of CIT vs Shreenath Infrastructure, Tax appeal Nos 147 & 148 of 2014. 7. However, assessing officer rejected the contention of the assessee and observed that department has not accepted the decision of High Court as it is contrary to its own decision in the case of Moon Star Developer, which is in favour of revenue. The assessing officer noted that point of time (relative to the completion of the constructed asset) when the contract is entered into between the seller and the buyer, was held to be the deciding factor for ascertaining if the contract was a works contract (thus liable to sales tax) or was contract for the sale of immovable property (thus liable to stamp duty and not sales tax). In the case of the assessee, as the assessee has entered into a contract for the construction of house after the sales of land and before construction is complete, it would be a "works contract'. Assessee's status of developing and building housing project as a whole ceases to exist as soon as the assessee transfers the ownership of the plots to the individual plot owners. Thereafter, the assessee entered into agreement with the independent owners of plot of land to construct house on the respective plot as per the plot owner's requirement. Therefore, after selling the plots of land, the assessee becomes an entity which executes the housing project as a works contract awarded by the individual plot owner. As per the explanation to section 80IB(10) : " For removal of doubts, it is hereby declared that nothing contained in this sub- section shall apply to any undertaking which executes the housing project as a Page | 5 ITA No.235/SRT/2020 A.Y.2010-11 M/s Samruddhi Developers works contract awarded by any person ( including the central or State Government.) 8. Therefore, assessing officer noted that that the assessee, by cutting the land into independent plots of different sizes and selling these plots independently, ceased its status as developer of the project and therefore become ineligible for claiming such deductions. Further, the assessee becomes "Contractor' by entering into independent construction contracts with individual plot owner. In these circumstances, the condition laid down in section 80IB(10) of the Act r.w.s 80IB(1), are not fulfilled by the assessee. In view of the above the deduction claimed by the assessee u/s 80IB (10) of the Act was rejected and Rs.2,90,05,475/- was added with total income of the assessee. 9. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has deleted the addition made by the Assessing Officer, observing as follows:- “3.3 I have considered the facts and circumstances of the case, the observations of the AO, submissions of the assessee, material available on record and the relevant judicial pronouncements on the above matter. The first ground of appeal of the assessee is that the AO has erred in law and on facts in holding that for the claim of deduction u/s.80IB(10), the assessee ought to be the owner of the land. As per this ground of appeal the AO has not appreciated the relevant provisions of law in this regard. As per this ground of appeal the assessee has prayed that it be so held that the income of the, residential housing project developed and constructed by the assessee is eligible for deduction u/s 80IB(10). The second ground of appeal of the assessee is that the AO has erred in law and on facts in rejecting the claim of deduction u/s 80IB(10) claimed at Rs.2,90,05,475/- on the ground that the conditions laid down for deduction u/s.80IB were not fulfilled. As per this ground of appeal the rejection of assessee's claim u/s.80IB(10) is in complete disregard of the facts of the assessee's case and the law governing the allowance of deduction u/s 80IB(10). As per this ground of appeal the assessee has prayed that it be so held that the income of the residential housing project developed and constructed by the assessee is eligible for deduction u/s 80IB(10) and that the Ld. AO be directed to allow the claim of deduction u/s 80IB(10) of Rs.2,90,05,475/- as made in the determination of taxable 3.3.1 During the current proceedings the assessee has filed writ submissions, which has been considered carefully. It has contended that the AO has disallowed the claim of deduction u/s 80IB(10) by holding it to be a work contract and assessee is not a developer. It is further stated that it has derived income from the residential housing project which is commenced in the year 2007-08 and deduction u/s 80IB(10) was claimed from the AY 2009-10. Assessee had further submitted that similar disallowances were made by the A.O. in AY 2009-10 and 2011-12 and in appeal the Page | 6 ITA No.235/SRT/2020 A.Y.2010-11 M/s Samruddhi Developers same were allowed by the CIT(A). Copy of appellate orders for AY 2009-10 and 2011-12 were filed by the assessee and has been perused and placed; on record. For AY 2009-10 the issue was contested by the Department before Hon`ble ITAT, Surat and the same was dismissed vide order ITA No.1558/Ahd/2014/SRT dated 19.03.2018. Copy of the said order filed by the assessee is placed on record. The operative part of the order No.CAB-3/433/2014-15 dated 27.07.2016 of CIT(A)-3, Vadodara for AY 2011-12 on this issue is reproduced as under: “5.3 It is mentioned that similar/same claim of deduction was made by the assessee u/s 80IB(10) in its case for AY 2009-10 also and such claim of the assessee was denied by the AO for the same reasons for which its claim of deduction of Rs.1,11,91,329/- has been denied u/s 80IB(10) for the year under consideration. The Ld. CIT(A) i.e. my predecessor has allowed the similar claim of deduction of the assessee as made u/s 80IB(10) for AY.2009-10. In this regard the relevant part of decision of Ld. CIT(A)-VI, Baroda as given as per his appeal order in appeal no. CAB/VI-474/2011-12 dated 14/02/2014 is reproduced hereunder for reference: “5.3 I have carefully considered the facts and the circumstances of the case, the observation of the Assessing Officer, the submissions for the assessee and the judicial pronouncements on the subject. In the order u/s 143(3), the Assessing Officer has disallowed the claimed deduction u/s 80IB(10) mainly on two grounds viz. (i) the assessee was not the owner of the land on which the project was developed since the completion certificate was in the name of individual buyers and (ii) the assessee had sold individual plots to independent buyers, has registered sale documents for the plot of land, thereby reducing the size of the plot to less than 1 acre and has constructed the dwelling units in pursuance of a separate construction agreement with the independent plot owners and therefore, the assessee is only a contractor and not developer. 5.4 As far as the issues of ownership of the land is concerned, the same has been settled in favour of the assessee in A.Y.2005-06 by Hon'ble Gujarat High Court, in Tax Appeal No.1225 of 2009, in the case of Vedant Enterprises. In this case, Hon'ble Gujarat High court adjudicated on the following substantial question of law - “Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing deduction u/s.80IB(10) r.w.s. 80IB(10) to the assessee when 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 when the transfer of dwelling units in favour of the end-users was made by the landowner and not by the assessee ?” 30. The essence of sub-Section (10) of Section 80IB, therefore, requires involvement of an undertaking in developing and building housing projects approved by the local authority. Apparently, such provision would be aimed at giving encouragement to providing housing units in the urban and semi- urban areas, where there is perennial and acute shortage of housing, particularly, for the middle income group citizens. To ensure that the benefit reaches the people, certain conditions were provided in sub-Section(10) such Page | 7 ITA No.235/SRT/2020 A.Y.2010-11 M/s Samruddhi Developers as specifying date by which the undertaking must commence the developing and construction work as also providing for the minimum area of plot of land on which such project would be put up as well as maximum built up area of each of the residential units to be located thereon. The provisions nowhere required that only those developers who themselves own the land would receive the deduction under Section 80IB(10) of the Act. 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 governing construction in urban and semi-urban areas, there was any such restriction. It is, however, the thrust of the argument of the Revenue that in order to receive benefit under Section 80IB(10) of the Act, such requirement must be read into the statute. We cannot accept such a contention. Firstly, as already noted, there is nothing under Section 80IB (10) of the Act requiring that ownership of the land must vest in the developer to be able to qualify for such deduction. Secondly, term developer has been understood in common parlance as well as in legal sense carrying a much wider connotation. The Tribunal itself in the impugned order has traced different meanings of term developer explained in different dictionaries, which read as under:- “a. The Webster's Encyclopedia unabridged of the English Language gives Following meaning of the term 'developer' as: “1. One who or that which develops; 2. A person who invests in and develops the Urban or Suburban potentialities of real estate. b. Oxford Advanced Learners Dictionary of Current English Fourth Indian Edition gives meaning of the term 'developer' as persons or company that develops land. c. Random House Dictionary of the English Language, the following can be found. Develop: a. To bring out the capabilities or possibilities of; bring to a more advanced or effective state. b. To cause to grow or expand. Developer: a. The act or process of developing; progress. b. Synonym: Expansion, elaboration, growth, evolution, unfolding, maturing, maturation. d. Webster Dictionary, the following definitions emerge: a. To realize the potential of; b. To aid in the growth of Strength, develop the biceps, c. To bring into being: make active (develop a business) d. To convert (a tract of land) for specific purpose, as by building extensively. e. Law lexicon Dictionary: The following definitions could be seen: Development a. To act, process or result of development or growing or causing to grow; the state of being developed. b. Happening.” Page | 8 ITA No.235/SRT/2020 A.Y.2010-11 M/s Samruddhi Developers 32. Section 80IB(10) of the Act thus provides for deductions to an undertaking engaged in the business of developing and constructing housing projects under certain circumstances noted above. It does not provide that the land must be owned by the assessee seeking such deductions. 33. It is well settled that while interpreting the statute, particularly, the taxing statute, nothing can be read into the provisions which has not been provided by the Legislature. The condition which is not made part of Section 80IB(10) of the Act, namely that of owning the land, which the assessee develops, cannot be supplied by any purported legislative intent. (Emphasis supplied)” 3.3.2 In assessee’s own case for AY.2009-10 Hon'ble ITAT, Ahmedabad Surat Bench has deliberated on this issue. Order No.1558/AHD/2014/SRT was passed on 19.03.2018. Relevant part of the said order reproduced below: “5. Replying to the above, the ld. Assessee’s Representative (AR) submitted that as per decision of Hon’ble Gujarat High Court in the cases of CIT vs. Vishal Construction Company [2013] 35 taxmann. Com 182 (Gujarat), CIT vs. Mahadev Developers [2013] 32 taxmann.com 291 (Gujarat) and Radhe Developers, wherein it has been held that ownership of land for development of a housing project is not a precondition for claiming deduction u/s 80IB(10) of the Act. The ld. AR also pointed out that as per order of ITAT, Ahmedabad in the case of M/s. Satsang Developers vs. ACIT, in ITA No.1011/Ahd/2012 and other related appeals order dated 12.11.2013 has followed the decision of Hon’ble Gujarat High Court (Supra) and has held that the ownership of land is not a condition precedent for developing housing project and claiming deduction u/s. 80IB(10) of the Act. 6. On careful consideration of above rival submissions, when we carefully perused and logically analyzed that the relevant operative part of the first appellate order i.e., para 5.3 to 5.7 then we find that the ld. CIT(A) has considered ratio of the various decisions of Hon’ble Gujarat High Court including decision in the case of Vedant Enterprises in Tax Appeal 1225/2009, decision in the case of Vishal Construction (supra) and Madhav Developers (supra),wherein their lordship speaking for the Jurisdictional High Court categorically held that the ownership of land for development of housing project is not a precondition for claiming deduction u/s. 80IB(10) of the Act. At this juncture, we also find it appropriate to consider the order of ITAT, Ahmedabad in the case of M/s. Satsang Developers vs. ACIT (supra)reported at [2013] 37 CCH 0249 AhdTrib which was again followed by the ITAT, Ahmedabad in the case of Narayan Realty Ltd. Vs. Dy. CIT reported at [2014] 40 CCH 0177 AhdTrib, as vehemently relied by the ld. AR, wherein it was held that in a situation where the assessee had sold the land separately and undertook work of construction of the house on the land and entered into two separate contracts then, it has to be held that the assessee is a developer and not a mere contractor and hence it is eligible for deduction u/s. 80IB(10) of the Act. 7. In the present case, the assessee by cutting land into independent plots on different sized sold the land thereafter by entering into an independent construction agreement with individual plot owners undertook construction work. The AO in para 4 held that after selling plots the assessee seized to Page | 9 ITA No.235/SRT/2020 A.Y.2010-11 M/s Samruddhi Developers having a status of developer of the project and therefore, became ineligible for claiming deduction u/s. 80IB(10) of the Act. But these contentions of the AO does not stand on the merits in view of the decisions of Hon’ble Jurisdictional High Court as respectfully noted above. The conclusion drawn by the ld. CIT(A) is quite correct and we are unable to see any perversity or any other valid reason to interfere with the same. Thus, the same is confirmed. Accordingly, sole ground of the Revenue being devoid of merits is dismissed. “3.3.3 Since the facts and circumstances of the case remains the same as that of A.Y. 2009-10 and 2011-12, respectfully following the orders of my predecessors as I well as of Hon'ble ITAT, Surat, the AO is directed to delete the addition made of Rs.2,90,05,475/-.” 10. Aggrieved by the order of ld CIT(A), the Revenue is in appeal before us. 11. Learned DR for the Revenue argued that assessing officer has identified the assessee as a ‘Works Contractor”, therefore assessee is not eligible to claim deduction under section 80IB(10) of the Act. Therefore, ld DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 12. On the other hand, ld Counsel for the assessee submitted that ld CIT(A) has passed the reasoned and speaking order and after relying on the judgment of the Jurisdictional ITAT Surat vide order in ITA No.1558/Ahd/2014/SRT dated 19.03.2018 in assessee`s own case. Copy of the said order filed by the assessee is placed on record. Therefore, ld Counsel contended that order passed by the ld CIT(A) may be confirmed. 13. After giving our thoughtful consideration to the submission of the parties and perusing the judicial decisions relied upon by the Ld. AR, we find that the issue involved in the present appeal is no longer res integra. The question as to whether assessee is a ‘Developer’ or ‘Works Contractor’ has been adjudicated by the Coordinate Bench of ITAT, Surat, in favour of assessee, in ITA No.1558/Ahd/2014/SRT dated 19.03.2018 in assessee`s own case. 14. As the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench, in assessee`s own case and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid Page | 10 ITA No.235/SRT/2020 A.Y.2010-11 M/s Samruddhi Developers findings of the Coordinate Bench (supra). We find no reason to interfere in the said order of the Coordinate Bench, therefore, respectfully following the binding judgment of the Coordinate Bench in assessee’s own case, the ld CIT(A) has rightly deleted the addition. Therefore, we confirm the findings of ld CIT(A) and dismiss the ground raised by the Revenue. 15. Coming to ground No. 2 and 2.2 raised by the Revenue, is concerned, we note that facts of the assessee`s case have already been narrated by us in above para, therefore we do not repeat them again. Learned DR for the Revenue has argued and stated that Ld. CIT(A) has committed patent error in restricting the profit on sale of unutilized FSA at 10.41% as against 36.87% worked out by the A.O contrary to the judgment of Hon'ble High Court in the case of Moon Star Developers reported in 45 taxmann.com. 181 being ratio decedent. The ld DR also pointed out that Ld. CIT(A) erred in deleting the disallowance u/s 80IB of the Act of Rs.76,74,800/- out of Rs.1,06,94,319/- by restricting the disallowance at 10.41% without appreciating that the assessee during the course of appellate proceedings did not furnish the manner of working /arriving the figure of disallowance at 10.41% being profit on sale of unutilized FSI. 16. On the other hand, ld Counsel for the assessee defended the order passed by the ld CIT(A). 17. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that this ground deals with the disallowance of claim of deduction u/s 80IB of Rs.1,06,94,319/- being profit earned from sale of unutilized FSI on the ground that the assessee had claimed profit from sale of unutilized FSI of 6151.47 sq.mtr. (i.e. 40.41% of total FSI of 15,219.60 sq. mtr) available for construction. During the course of assessment proceedings with regard to the claim of deduction u/s 80IB(10), the AO has taken an alternative stand by restricting the deduction u/s 80IB(10) in relation to the sale of unutilized FSI relying upon decision of Hon'ble High Court of Gujarat as given in the case of CIT Vs. Moon Star Developers, 45 taxmann.com 181. In this referred case, the assessee Page | 11 ITA No.235/SRT/2020 A.Y.2010-11 M/s Samruddhi Developers developed a housing project and it had filed return of income claiming deduction u/s 80IB(10) on the entire income. The AO noticed that the assessee had carried out only partial construction out of total available FSI for the land in question. Though as per approved plan, construction was carried out, but there was balance FSI available on the plots of land which was not utilized. The AO was, therefore, of the opinion that the assessee could not claim deduction u/s 80IB(10) for the profit relatable to sale of unutilized FSI. In view of this decision of Hon'ble High Court of Gujarat, as an alternative stand the AO disallowed Rs.1,06,94,319/- being the profit claimed from unutilized FSI out of total claim of deduction u/s 80IB(10) of Rs. 2,90,05,475/-. 18. We note that during the appellate proceedings, the assessee contended that the marginal under utilization of FSI certainly cannot be a ground for rejecting the claim under section 80IB(10) of the Act. It has further contended that due to certain special grounds there may be considerable under utilization and such case may stand on a different footing. It has further contented that in the judgement of the Hon'ble Gujarat High Court in the case of CIT Vs. Shreenath Infrastructure 44 taxmann.com 461, the Hon'ble High Court, after considering the judgment in the case of Moonstar Developers has held that it is not possible to utilize the full FSI allotted and that the under utilization in the marginal range of 25 - 30% would not be hit by disallowance of deduction u/s 80IB(10). The Assessee has also placed reliance on the case of Narayan Housing Corporation in ITA No.2192 & 2193/Ahd/2012 dated 28.07.2016 of Hon'ble ITAT, Ahmedabad wherein the order has been passed after discussing both the orders of Hon'ble Gujarat High Court in the case of Moonstar and Srireenath Infrastructure. The Hon'ble ITAT Ahmedabad has held that disallowance on account of unutilized FSI was restricted to 30% as against the 60% made by AO. On the basis of the above order of Hon'ble ITAT, assessee has contended that in its case the disallowance of deduction may be restricted in relation to the unutilized FSI. 19. Therefore, based on these facts, the ld CIT(A) directed the AO to restrict the disallowance in relation to the unutilized FSI at 10.41% of total claim of Page | 12 ITA No.235/SRT/2020 A.Y.2010-11 M/s Samruddhi Developers deduction u/s 80IB(10) of the Act, which comes to Rs.30,19,469/-. Accordingly, addition to the extent of Rs.30,19,469/- was confirmed out of total disallowance of Rs.1,06,94,319/- and balance Rs.76,74,850/- (Rs.1,06,94,319- Rs.30,19,469) was deleted. We have gone through the findings of ld CIT(A) and noted that there is no infirmity in the conclusion reached by the ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed. 20. In the result, the appeal of the Revenue is dismissed. Order is pronounced on 06/10/2022 by placing the result on the Notice Board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat/िदनांक/ Date: 06/10/2022 Dkp Outsourcing Sr.P.S./SS Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat