TMI Blog2013 (9) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... r condonation of delay in filing the appeal was accepted - The delay in filing the appeal is accordingly condoned. Deduction u/s 80-IB(10) - To be eligible for exclusion from the built up area, whether the common areas have to be shared with all the residents, who have occupied the residential units, or even if it was shared with one, the assessee would be entitled to the said benefits - Held that:- The Assessee should get the benefit of the provisions of Sec.80IB(10) which were exemption provisions - the Assessee would be entitled to deduction u/s.80-IB(10) of the Act on the profits of the 16 flats which were excluded by the CIT(A) in the order - The fact that it was not common area for all the flats in the building cannot be the basis to apportion the area of covered balcony in measuring the area of the two adjoining flats to which the covered balcony was common. The definition of the built up area in the provisions of sec.80-IB(1) does not speak of common area for all flats in a housing project. The balcony areas, which were added as forming part of the built of area of the 16 flats which were considered as exceeding the built up area of 1500 sq.ft., were common areas and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contending that the balcony area was a common area to be enjoyed by the other flat owners as well and therefore should not be reckoned for the purpose of arriving at the built-up area of each flat. 5. The Assessing Officer held that since the built-up area of each of the flats was not 1500 sq.ft. or less, the assessee was not entitled to get deduction u/s. 80IB of the Act. 6. On appeal by the assessee, the CIT(Appeals) held that Assessee should be allowed deduction u/s.80-IB(10) of the Act on the profits of the project after excluding the profits attributable to the 16 flats which are said to be of an area of above 1500 Sq.ft. The relevant findings of the CIT(A) were as follows:- 5.0. I have perused the assessment order, the relevant records, the basic documents as also various case laws cited. 5.1. The deduction u/s. 80IB is mainly based on the built area of the flat. Sub clause-a of subsection 14 of section 80IB defines built area as under :- (a) built-up area means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common areas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 1500 sft, they may be excluded for exemption. However, in the light of the decision of the Special Bench in the case of Brahma Associates (supra), merely because some flats are larger than 1500 sft, the assessee will not lost the benefit in its entirety. Only with reference to the flats which has more than the prescribed, the assessee will lose the benefit . 9.0. Following the binding precedent of Hon ble ITAT Bangalore Bench, I hold that the restriction for deduction u/s. 80IB of Income-tax Act, 1961 is to be made only with reference to area of these 16 flats whose built up area is more than the prescribed limit of 1500 sq.ft. Accordingly, I direct the Assessing Officer to proportionately calculate the disallowance to be made u/s. 80IB for in proportion to the area of these 16 flats and restrict the disallowance u/s. 80IB of Income-tax Act, 1961 only to the same. For the balance area, the appellant would be entitled to the deduction u/s. 80IB of Income-tax Act. 1961. 7. On appeal by the Revenue against the order of CIT(A) allowing proportionate deduction u/s.80-IB(10) of the Act, the Tribunal confirmed the above order of the CIT(A). Against the order of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to the tax benefits. With a view to clarify accordingly, an Explanation after sub-section (1) of Section 80-IB has been inserted so as to provide that nothing contained in sub-section shall apply to any undertaking which executes the housing project as a works contract awarded by any other person including Central or State Government. This amendment has been made applicable with retrospective effect from 1st April, 2001 and will accordingly apply in relation to assessment year 2001-02 and subsequent assessment years. Further, the objective of the tax benefit for housing projects is to build housing stock for low and middle income households. This has been ensured by limiting the size of the residential unit. Therefore, while interpreting Section 80-IB(10) this object has to be kept in mind and if there is any ambiguity or difficulty, it is the substance, which has to preferred to the format. Keeping in mind the fact that while implementing these projects at the ground level, the builders encountered innumerable problems. If there are minor defects in the construction put up, which is unintentional or by which they have not made any special gains of money, the benefit which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it with other 159 owners of the residential units or they have to share it with the adjoining owner of the residential unit, this area cannot be taken into consideration to decide the built up area. From the facts, it is clear that if this balcony space is excluded all the 160 units are less than 1500 sq.ft. and therefore the assessee was entitled to 100% tax exemption on this project. However, the Appellate Authority as well as the Tribunal have not extended the said benefit to 16 residential units. As the assessee has not preferred any appeal against the said order, it will not be appropriate for this Court to extend the said benefit in these proceedings. However, as the law stands today, in view of the interpretations placed by them on the aforesaid provisions, the assessee has not violated the provisions of section 80-IB(10) of the Act and in fact was entitled to 100% tax exemption on the profits derived from the project. Therefore the substantial question of law framed is answered in favour of the assessee and against the revenue. 9. Therefore, we do not see any merit in this appeal and accordingly the appeal is dismissed. No costs. 8. We have already seen that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Hon ble High Court of Karnataka, the counsel who appeared on behalf of the assessee before the Hon ble Karnataka High court, after examining the order of the CIT(A), advised the assessee to file an appeal against the order of the CIT(Appeals), whereby the CIT(A) had not allowed deduction u/s. 80IB of the Act on 16 flats, which according to the CIT(A), exceeded the built-up area of 1500 sq.ft. It has further been mentioned that on receiving such advice, the assessee filed an application within 4 days of obtaining the professional advice. It has further been submitted that if this application for condonation of delay in filing the appeal is not allowed, the assessee would be put to great hardship and irreparable injury and on the other hand no hardship or injury would be caused to the Respondent, if this application of Condonation of delay is allowed. Reliance was placed on the decision of the Hon ble Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji Ors. (1987) 167 ITR 471 and also in the case of Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi and Ors. 118 ITR 507. Further the assessee also relied on decisions of the Hon ble Apex Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f about 1331 days in filing the appeal wherein the plea of delay in filing appeal due to advice given by a new counsel was accepted as sufficient. The Hon ble Karnataka High Court in the case of CIT v. ISRO Satellite Centre, ITA No. 532/2008 dated 28.10.2011 has condoned the delay of five years in filing appeal before them which was explained due to delay in getting legal advice from its legal advisors and getting approval from Department of Science and PMO. In the aforesaid decision, the Hon ble Court found that the very liability of the assessee was non-existent and therefore condoned the delay in filing appeal. 14. Keeping in mind the aforesaid principles, we shall consider the claim of the assessee in the present case. Admittedly the advice was given by the counsel who appeared on behalf of the Assessee before the Hon ble High Court. The decision of the Hon ble High Court was rendered on 28.2.2012. The appeal has been filed by the Assessee before the Tribunal on 26.3.2012. Hence, we find that there has been no willful neglect on the part of the Assessee. In such matters the advice of the professional would be the point of time at which the Assessee would begin to explore the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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