TMI Blog2014 (4) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax V/s G.R. Developers [2012 (7) TMI 91 - KARNATAKA HIGH COURT] - the area of courtyard cannot be included to calculate the built-up area in terms of Section 80- IB(10) of the Act – the Tribunal was not justified to come to the conclusion that the area of the courtyard is to be included to calculate the built-up area and thereby holding that the residential unit was more than 1500 square feet which would disentitle the appellant to claim such deduction – the Tribunal has misconstrued the provisions of Income Tax Act and the material on record to deny the benefit of deduction to the appellant in terms of Section 80-IB(10) of the Act – Decided in favour of Assessee. - Tax Appeal No.4 of 2014 - - - Dated:- 11-3-2014 - R. S. Dalvi And F. M. Reis,JJ. For the Appellants : Mr. Chythanya K. K. Mr. Shailesh Redkar, Advs. For the Respondent : Ms. Asha Desai, Adv. JUDGMENT (Per F. M. Reis, J.) The above appeal was fixed for final disposal on the following substantial questions of law by order dated 23.01.2014. 1. Whether the rear courtyard enclosed by walls of a residential unit could be included as built-up area of the residential unit ? 2. Whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o construct apartments or flats and that the absence of common areas cannot disqualify the appellant from claiming the deduction under Section 80-IB(10). It was further observed that the intention of the legislature has been ensured by limiting the size of the residential unit to 1500 square feet. Accordingly, the deduction refused by the AO was ordered to be deleted and the appeal was allowed. Thereafter, the respondent preferred an appeal before the Income Tax Appellate Tribunal. The learned Tribunal after examining the material on record inter-alia held that the presence of common area is not a condition in order to qualify for deduction under Section 80-IB(10) of the said Act. Nevertheless, upon inspection of the concerned residential unit came to the conclusion that the row house constructed by the appellant had a courtyard on the rear which also had to be added for computing the said built up area of 1500 square feet and as such the appeal filed by the respondent/revenue was allowed. Being aggrieved by the said order, the appellant preferred the above appeal which was ordered to be considered on the aforesaid substantial questions of law. 4. The learned counsel appearing f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as thereafter taken us through the definition of the words 'built-up area' under the said Act and pointed out that only the common open spaces are to be excluded for computing the 'built-up area' and not the exclusive area. The learned counsel as such submits that the above appeal deserves to be rejected. 6. We have examined the submissions of the learned counsel and also gone through the records. Before we proceed to consider the rival contentions we would take note of the relevant provisions of the Income Tax Act to decide such controversy. Section 80-IB(10) of the Income Tax Act reads as under : The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, [2008] by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,- (a)........... (i)............... (ii).............. (iii).............. Explanation.......... (i)............. (ii)............. (b).................... (c) the residential unit has a maximum built-up area of one thousand square feet where such res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reads thus : 'Building' :- A structure with a roof and walls. The process or trade of building houses and other structures. 'Built-up' :- (of an area) densely covered by buildings. Increased in height by the addition of parts. 10. Thus, unless and until it is shown that some construction is put up the area of the courtyard which is open to the sky cannot be included to compute the built-up area. The definition of the words 'built-up area' was introduced by the Finance Act of 2004 w.e.f. 1.4.2005, which is not otherwise applicable to the facts of the present case, also clearly provides that the built-up area would mean the inner measurements of the residential unit at the floor level including the projections and balconies as increased by the thickness of the wall but does not include the common area shared with other residential unit. In such circumstances, the built-up area is to be worked out from the wall of the residential unit. The question of extending it to mean that the area within the compound around an open land is erroneous. The building plan sanctioned by the statutory authorities does not disclose that the built-up area was exceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be held to be retrospective; it applies only to such housing projects, which are approved subsequent to 01.04.2005. In that view of the matter, the assessee, in the instant case, is entitled to the benefit of the aforesaid provision and hence the said substantial question of law is answered in favour of the assessee and against the revenue. In such circumstances, the contention of the learned counsel appearing for the respondent that built-up area is to be calculated on the basis of the said definition cannot be accepted as it is not in dispute that the project of the appellant was approved much prior to 01.04.2005. Hence, the question of going into the said definition in the facts of the present case would not arise. 11. In the present case, it cannot be disputed that the area which is sought to be included by the learned Tribunal to calculate the built up area is the rear courtyard. The meaning of a courtyard in the Legal dictionary inter-alia signifies a space of land around a dwelling house which might be enclosed appurtenant to which buildings and structures may be erected. A courtyard is an enclosed ground attached to a house. It is not in dispute that the sanction gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The construction is completed within the period stipulated. 84 flats, according to the assessee is within the 1,500 square feet. The material on record discloses that a head room is constructed. The head room is not included in the sale deed. The local authority, after construction of the building, inspected the same and has granted occupancy certificate. Therefore, the construction put up by the assessee prima facie can be said to be as per the sanctioned plan. If after issue of occupancy certificate and after sale of these residential flats, if the owners of these flats on the top floor decided to put up a head room and engaged the very same contractor and the engineer may have put up the identical structures, it cannot be said that the assessee has put up the said construction and thus, contravened the requirement of Section 80-IB. The material on record does not disclose that the assessee put up the said construction prior to the sale of those flats and excluded the said construction in the sale deed with an intention of getting benefit of Section 80-IB(10). 3(a) Insofar as balconies are concerned, prior to 01.04.2005, the area covered by them has to be excluded in calcul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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