TMI Blog2016 (9) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... f the room underneath. When a Local Authority, endowed with the jurisdiction to grant the approval is guided in its approval by Regulation as to what constitutes the plinth area, which is the built-up area, it is difficult for us to agree with the contention of the Revenue as well as the reasoning of the Tribunal that for the purpose of considering the claim under section 80-IB, the built-up area would be different from what has been given approval by the Local Authority, on a building project. Given the fact that during 2003-04 there was no definition at all on what a built-up area is, the understanding of the Revenue, which is evidently contrary to the approval of the Local Authority based on the Rules and Regulations could not be sustained. Consequently, we have no hesitation in agreeing with the assessee's contention that open terrace area, even if be private terrace cannot form part of the built-up area. See M/s. Ashina Amar Developers vs. ITO [2016 (3) TMI 84 - ITAT KOLKATA] - Decided in favour of assessee - ITA Nos. 204 & 270/JP/2015 - - - Dated:- 8-9-2016 - SHRI KUL BHARAT, JM SHRI VIKRAM SINGH YADAV, AM Revenue by : Shri Raghuvir Singh Dagur (Addl. CIT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h regard to the fact that the assessee satisfied all the conditions. The only dispute is with regard to the inclusion of area of terrace. He submitted that the only issue to be examined is whether the open terrace is to be treated as balcony for the purpose of determining the built up area. He submitted that Built up Area is defined under section 80IB(14)(a), which means the inner measurements of the residential unit at the floor level, including the projection and the balconies, as increased by the thickness of the walls but does not include the common areas shared with other residential units. He submitted that from the definition it can be construed that built up area excludes only the common area shared with other residential units. In the case of flats, there may be common area such as common stairs, lift, lobby etc. but villa is a separate and exclusive unit where is no common area which is shared with other residential unit. The AO presumed the open terrace area as balcony. The ld. Counsel for the assessee submitted that under the identical facts, the Coordinate Bench of the Tribunal in the case of M/s. Ashina Amar Developers vs. ITO in ITA No. 12/Kpl/2014 dated 22.01.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than one residential unit in the housing project should be allotted to a person being an individual and in case where a residential unit in such housing project is allotted to a person being an individual, no other residential unit should be allotted to spouse or minor children of his HUF. During the course of assessment proceedings, vide letter dated 17.1.2013, the assessee stated that no flat has been allotted to any spouse or minor children of the allottee. Further, an affidavit dated 05.02.2013 was also filed by the authorized signatory, Shri Sanjeev Rawat duly notarized to the effect that not more than one residential unit in the housing project has been allotted to an individual, his spouse, or minor children or HUF by the assessee. From the detailed discussion made above, it is clear that the assessee has not fulfilled the basic eligibility condition for deduction u/s 80IB(10) of the IT Act as there is violation of clause (c) as discussed above. On the basis of these findings, it is hereby held that the assessee is not entitled to the deduction claimed by it and according, the claim for deduction u/s 80IB(10) amounting to ₹ 7,13,77,130/- is hereby disallowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... halakshmi Housing, 2012-TIOL-951-HC MAD-IT, that open terrace area cannot form part of built up area- For including any area as built-up area there should be something built in such area When area was open to sky question of holding that there was anything built therein to be included as built up area would not arise at all Following ratio laid down by Madras High Court, area of courtyard was to be excluded to calculate built-up area on exclusion of courtyard area, residential unit came to be less than 1500 square feet which would entitle appellant/assessee to claim deduction u/s 80-IB(1) Appellant/assessee was eligible for deduction u/s 80-IB(10) Judgment of ITAT quashed and set aside Assessee s appeal allowed. (c) In the case of Sanghvi Doshi Enterprises (2011) 12 txmann.com 240, the ITAT Chennai Bench held that area of the terrace will be included in the built up area. The issue that was adjudicated upon was similar to the instant case. The relevant extract of this order is given below Coming to the issue as to whether the private terrace is to be included in the computation of built up area, it is noticed that the term built up area has been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odi Builders Realtors (P) Ltd. vs. ACIT ITA No. 1541/Hyd/2010 of the ITAT Hyderabad, wherein it has held that balcony and portico would be included in the built up area. On this issue there is no dispute. However, this case law is not relevant to the issue under consideration. 3.4. From the decisions of the Madras High Court, Bombay High Court and the ITAT Ahmedabad, discussed above in para 3.3 above, it is seen that the area under consideration cannot be included in the built up area if it is uncovered, open to sky, and without any construction on it, notwithstanding the fact that it is a private, exclusive area of the owner, accessible only through the dwelling unit (bed room) and adjoining to it. In this case, the area under consideration is the roof of the ground floor, is uncovered, open to sky, and without any construction on it although it is accessible exclusively to the owner through the bedroom (and not a part of the common area). Therefore, following the above case laws (discussed in pafra 3.3, above), this private, open terrace, cannot be included in the built up area of the residential unit, as defined in Sec 80IB(14)(a). Therefore, the built up area of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he maximum area specified in section 80IB(10) of the Act. The Learned AO simply ignored the sale deeds that were produced before him and placed reliance on the brochures issued by the assessee to attract prospective buyers and estimated the built up area by including the terrace area. We find that the actual built up area of residential building should not exceed the maximum area specified in the Act and there is no scope for making the assumptions and estimates. 4.2.2. Reliance is placed on the co-ordinate bench decision of Mumbai Tribunal in the case of ACIT vs Sheth Developers reported in 33 SOT 277 (Mum)wherein it was held that the built up area has to be calculated on an actual basis and not on the basis of estimates. In that case, the AO relied on a ratio worked out from the map attached with the occupancy certificate, for arriving at the built up area from the carpet area which was turned down by the Tribunal. 4.2.3. We also find lot of force in the alternative arguments of the Learned AR that the term terrace is not defined in the Act. However the word terrace originates from a French term and is known as terrasse, terrazzo in Italian and spelled as terraza in Spa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Tribunal. 6. The Tribunal considered the assessee's appeal along with two other assessees' appeals involving similar questions of law and passed a common order. One such assessee's case came up for consideration in T.C.Nos.581, 1186 of 2008 and 136 of 2009 in the case of Ceebros Hotels Pvt. Ltd. Vs. Deputy Commissioner of Income Tax. 8y judgment dated 19.10.2012, this Court allowed the assessee's appeal, holding that the open terrace area cannot form part of the built up area; in the result, the assessee would be entitled to deduction under Section 80-IB(10) of the Act and that the assessee would be entitled to proportionate relief as regards the units having built up area not more than 1500 sq.ft. 7. Even though learned standing counsel for the Revenue raised additional grounds regarding the principle of proportionality for grant of relief, yet, we find by reason of exclusion of open terrace are from the built up area, application of proportionality theory does not arise. In the circumstances, we find no justifiable ground to accept the plea of the Revenue on this aspect. 8. As far as the Revenue s contention that for the purpose of Section 80-IB(10} ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re us.19. However, in the course of hearing, the learned CIT -OR attempted to distinguish the judgement of the Hon'ble High Court by pointing out that the same related to assessment year 2003-04, a period during which the definition of 'builtup area' contained in section 801B(14)(a) of the Act was not on the statute and also the fact that the housing project under consideration of the Hon'ble High Court was approved by the concerned local authority prior to 01.04.2005 i.e. prior to the date when the definition of 'built-up area' was brought on the statute by way of section 80IB(14)(a) of the Act. 20. We have carefully perused the judgement of the Hon'ble Madras High Court and find that though the Hon'ble High Court was considering a project approved prior to 01.04.2005 yet it has taken into consideration the definition of 'built-up area' contained in section 801B(14)(a) of the Act, which was inserted w.e.f. 01.04.2005. As per the Hon'ble High Court even after assuming that such definition was to be retrospectively applied yet the area of open terrace would not fall within the meaning of the expression 'built-up area'. The Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the understanding of the Revenue, which is evidently contrary to the approval of the Local Authority based on the Rules and Regulations could not be sustained. Consequently, we have no hesitation in agreeing with the assessee's contention that open terrace area, even if be private terrace cannot form part of the built-up area 22. As per the Hon'ble High Court, terrace area would not form part of the built-up area by the reason of the fact that assessee sold it to the purchaser as a private terrace. At this stage, we may also point out that there is nothing in section 80IB(14)(a) of the Act to suggest that the factum of the terrace being available for exclusive use of the respective unit owner is a ground to consider it as a part of 'built-up area' for the purposes of clause (c) of section 80IB(10) of the Act. Thus, the argument of the learned CIT-OR is hereby rejected. 23. In view of the aforesaid judgement of the Hon'ble Madras High Court, we are unable to uphold the stand of the Assessing Officer to include area of terrace as a part of the 'built-up area' in a case where such terrace is a projection attached to the residential unit and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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