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The Income Tax Officer Versus M/s. Rane Associates

2015 (4) TMI 41 - ITAT PUNE

Deduction u/s.80IB(10) - whether the project 'Vanshaj Prestige' had commenced construction much before the amendment to section 80IB(14)(a) and therefore it is not possible for the assessee to comply with the definition of built up area? - whether CIT(Appeals) erred in holding that the assessee is eligible for deduction u/s.80IB(10) without appreciating that as per provisions of section 80IB(14)(a) built up area is to be calculated taking into account all the projections and balconies an .....

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aid plea, which has also been accepted by the CIT(A). As decided D.S. Kulkarni Developers Ltd. Vs. ACIT [2015 (4) TMI 6 - ITAT PUNE] in The extract of Rule 15.4.2, has been placed in the Paper Book at page 36, and it reflects that a multi storied stilt flooring space constructed under a building is allowed to be used as a parking subject to height restrictions. In terms thereof, it is sought to be made out that the area of car parking is specifically excludible while calculating ' builtup ar .....

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Decided in favour of assessee

Inclusion of common terrace identified in the built-up area of the respective flats - Held that:- CIT(A) has given a factual finding that the agreements with flat owners do not indicate that the common terrace was a part of the flat agreement. It is also observed by the CIT(A) that the respective flat owners were not the owners of so called common terrace and the assessee also pointed out before him that even the Government Registered Valuer in his report .....

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. Pannu And Ms. Sushma Chowla JJ. For the Appellant : Shri S.N. Puranik For the Respondent : Shri B.C. Malakar ORDER Per G. S. Pannu, AM: The captioned appeal by the Revenue and Cross Objection by assessee are directed against an order of the Commissioner of Income Tax (Appeals)-II, Pune dated 18.09.2012 which, in turn, has arisen from an order dated 30.12.2011 passed by the Assessing Officer u/s 143(3) of the Incometax Act, 1961 (in short the Act ) pertaining to the assessment year 2009-10. 2. .....

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a. 3) The learned Commissioner of Income tax (Appeals) erred in holding that the assessee is eligible for deduction u/s.80IB(10) without appreciating that as per provisions of section 80IB(14)(a) built up area is to be calculated taking into account all the projections and balconies and as such the flats on the first floor of building B exceeded the built up area of 1500 sq.ft. making the assessee ineligible for deduction u/s.80IB(10) of the Act. 4) The learned Commissioner of Income tax (Appeal .....

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p firm engaged in the business of builders and promoters. For the assessment year 2009-10, it filed a return of income declaring total income of ₹ 1,71,390/-, which inter-alia, included a claim of deduction under section 80IB(10) of the Act of ₹ 4,35,03,664/- in respect of the profits derived from development and building of a housing project named Vanshaj Prestige . The Assessing Officer carried out a verification exercise with respect to the claim of deduction under section 80IB(10 .....

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xecuted by the assessee comprised of 84 flats and assessee claimed that the project complied with all the conditions prescribed for claim of deduction under section 80IB(10) of the Act. As per the Assessing Officer, based on the report of the Government Registered Valuer, the built-up area in relation to four flats namely, B/101, B/102, B/103 and B/104 exceeded the prescribed limit of 1500 sq. ft. The details of alleged violation are as under:- Flat No. B/Up Area Sq.Ft. Attached terrace projecti .....

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as the additional common terrace attached to the flats, exceeded the limit of 1500 sq. ft. prescribed by clause (c) of section 80IB(10) of the Act. 6. In response, assessee pointed out that the projections and balconies could not be included in the expression built-up area as assessee s project was approved and commenced prior to 31.03.2005. It was pointed out that the definition of the expression built-up area contained in section 80IB(14)(a) of the Act, whereby it includes the projections and .....

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out that such area was not sold exclusively to any of the flat owners and therefore, the respective flat holders are not enjoying the exclusive use of such attached common terrace, and on this count also such area could not be included to calculate the built-up area of the four flats in question. In sum and substance, the claim of the assessee was that the built-up area of the aforesaid four flats was liable to the considered by excluding the attached terrace projections or the attached common .....

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instant project as it was commenced prior to the said amendment in section 80IB(14)(a) of the Act. The CIT(A) found weight in the aforesaid plea of the assessee having regard to the various decisions of the Tribunal relied upon before him. In particular, the CIT(A) has relied upon the order of Pune Bench of the Tribunal in the case of ITO Vs. Prime Properties vide ITA Nos.887, 888, 889/PN/2009, order dated 26.04.2012 to hold that for a project approved prior to 01.04.2005, the definition of bui .....

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other residents of the building were also entitled to use such common terrace. The CIT(A) also found weight in assessee s plea that even the Government Registered Valuer in his report nowhere stated that the common terrace was being exclusively used by the impugned four flat owners of building B in question. The CIT(A) has also referred to the decision of Pune Bench of the Tribunal in the case of D.S. Kulkarni Developers Ltd. Vs. ACIT, vide ITA Nos.1428 & 1429/PN/2008, dated 08.08.2012 in su .....

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s in appeal before us. 8. Before us, the learned Departmental Representative appearing for the Revenue has contended that the CIT(A) erred in allowing assessee s claim for deduction without appreciating that the definition of built-up area contained in section 80IB(14)(a) of the Act was to be applied to examine the claim of deduction under section 80IB(10) of the Act from assessment year 2005-06 onwards, irrespective of the date of approval of the project. 9. On the other hand, the learned Repre .....

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& Others, dated 28.10.2014. Reliance has also been placed on the judgment of the Hon ble Madras High Court in the cases of CIT Vs. Sanghvi and Doshi Enterprises reported in (2013) 214 taxman 463 (Madras) and CIT Vs. Mahalakshmi Housing in Tax Case (Appeal) Nos.585 of 2011 and 318 of 2012, vide order dated 02.11.2012. Reliance has also been placed on the judgment of Hon ble Bombay High Court in Common Wealth Developers Vs. ACIT reported in (2014) 102 DTR (Bom) 89. 10. We have carefully consi .....

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s having built-up area in excess of 1500 sq. ft. In coming to such conclusion, the Revenue has relied upon the definition of built-up area contained in section 80IB(14)(a) of the Act, which reads as under:- 80IB(14) For the purposes of this section,- (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 shared with other residential units .....

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assessee on twin grounds. Firstly, it is contented that the definition of the built-up area contained in section 80IB(14)(a) of the Act was inserted by the Finance (No.2) Act, 2004 w.e.f. 01.04.2005 and it is not applicable in the present case as assessee s project was approved and commenced prior to 01.04.2005. We are in complete agreement with the aforesaid plea, which has also been accepted by the CIT(A). In fact, an identical issue came up before the Tribunal in the case of D.S. Kulkarni Dev .....

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on, the built up area inter alia, includes the area of projections and balconies. The moot point is as to whether the such definition is applicable in respect of the project in question before us. Admittedly, it is emerging from the orders of the authorities below that the project DSK Frangipani commenced on 12.12.2003 i.e. prior to the 01.4.2005. Therefore, Revenue authorities are not justified in including the balconies/open terraces in the calculation of 'built-up area' and the defini .....

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-up area' and such area has been considered by him at 300 sq.ft. for each of the residential units. As noted by us earlier, the definition of 'built- up area' contained in Sec. 80 IB (14)(a) of the Act is not applicable in the present case, being a project having commenced prior to 01.4.2005, and therefore for such like projects, it would be in fitness of the things that the expression 'built up area' is understood as per the Development Control Rules of the local authority, .....

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extract of Rule 15.4.2, has been placed in the Paper Book at page 36, and it reflects that a multi storied stilt flooring space constructed under a building is allowed to be used as a parking subject to height restrictions. In terms thereof, it is sought to be made out that the area of car parking is specifically excludible while calculating ' builtup area' as per the Development Control Rules and therefore, the Assessing Officer was wrong in considering such area for the purpose of com .....

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s not attached for exclusive use of any of the flat owners and therefore, the said area could not be included in the built-up area of the respective flats made. On this aspect also, we find that the CIT(A) has given a factual finding that the agreements with flat owners do not indicate that the common terrace was a part of the flat agreement. It is also observed by the CIT(A) that the respective flat owners were not the owners of so called common terrace and the assessee also pointed out before .....

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pheld. 14. At the time of hearing, the learned Representative for the assessee also relied upon the decision of Pune Bench of the Tribunal in the case of Shri Naresh T. Wadhwani Vs. DCIT (supra), wherein after following the decision of the Hon ble Madras High Court in the case of M/s. Ceebros Hotels Private Limited Vs. DCIT, vide Tax Case (Appeal) No.581 of 2008 order dated 19.10.2012, it was held that even after taking into consideration the definition of built-up area contained in section 80IB .....

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