TMI Blog2012 (7) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... at area cannot be taken into consideration to decide the built-up area, thus 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 - decided in favour of assessee. - IT Appeal No. 177 of 2011 - - - Dated:- 28-2-2012 - N. Kumar and Ravi Malimath, JJ. E.R. Indrakumar and E.I. Sanmathi for the Appellant. Sriyuths A. Shankar and M. Lava for the Respondent. JUDGMENT N. Kumar, J. The revenue has preferred this appeal challenging the order passed by the Tribunal wherein it has been held that the assessee is entitled to claim deduction under Section 80-IB (10) of the Income Tax Act, 1961 (hereinafter referred to as "The Act) on pro rata basis in respect of those flats, the built-up area of which was not more than 1500 sq. ft. 2. The assessee is a partnership firm engaged in the business of construction and sale of flats. The assessee entered into joint development agreement with Sri Mahaveer Renka a residential project called 'Paramount Raghavendra Ariaht; which consists of 160 flats. The assessee had claimed deduction of the entire net prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents in his letter dated 28.03.2008. With regard to built-up area i.e. Plinth area he revised tins figures and shown flat area excluding covered balcony/covered garden/covered passage in respect of duplex flats as ranging from 1450 to 1474 sq. ft. The A-1 flat area was given as 1474 sq.ft. With regard to balconies it was mentioned that the duplex flats bearing A-13, A-11, L-20, L-9 L-17 have balconies but those balconies of this flat on mezzanine floor is only approachable to adjoining duplex flat A-2 owner. The; balcony is about 51.71 Sq. mtr. which works out to 556.6- Sq.Ft the ground floor area of 51.71 Sq. mtr, of this fiat appurtenant to this flat was stated to have been covered by garden in the passage. To make it clear, the balcony to the mezzanine floor of A-l and A-2 of 556.60 Sq.Ft, is so located that the bedroom doors of A-1 and A-2 open out to this big balcony and no other flat owners can walk into this balcony, The assessee's records show plinth area of A-l duplex flat as 1484 Sq.ft. and super built-up area as 1929 sq.ft, and difference on account of inclusion of common. area calculated as 30% over plinth area. The adjoining duplex flat A-2 is shown to have plinth ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ires to be set aside. 5. Per contra, the learned counsel appearing for the assesses submits that as is clear from the aforesaid facts, the balconies do not exclusively belong to the owners of the flats, it had to toe shared with others Sub-Section. 14(A) of Section, 80-IB where the built-up areas is defined, makes it explicitly clear that the common area shared with other residential units has to be excluded for the purpose of calculating built-up area to extend the benefit of Section 80-IB (10) of the Act. Once this balcony area is excluded none of the flats built-up area exceeds 1500 sq.ft. Therefore, the assessee is entitled to the said provision completely, though the Appellate Authorities have denied the said benefits to 16 flats. Therefore, he submits that no case for interference is made. 6. Therefore the substantial question of law that arise for consideration in this appeal is- "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 is shared with one, the assessee would be entitle to the said benefits.?" 7. The Circular No.5/10 dated 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le interpreting Section 80-IB(10) this object has to be kept in mind and if there to any ambiguity or difficulty, it is the substance, which has to be 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 accrued to them under this provision should not be denied on that score for the main. object sought to be achieved by introduction of this provision is achieved while considering the claim for benefit under this provision, , the authorities should lean in favour of encouraging such housing projects and not discouraging the persons from taking; up such housing projects. It is in this context probably that obstacles were put in assesses getting the benefit, the legislature introduced the definition of built-up area, which is very crucial factor in determining the benefit of tax to the assessee, which reads as under. "14( a ) "built- up area means the inner measurement of the residential unit at the floor level, includin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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