9911796707
TMI Blog2017 (11) TMI 1302X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer on account of disallowance of claim of deduction u/s. 80IB(10) without appreciating the fact that the 'built up area' of the villas constructed by the assessee is 1772.81 Sq. Ft. that exceeds the limit of 1500 Sq. Ft. thereby ignoring the definition as given in section 80IB(14) (a) of the IT Act 1961." 3.2 Appeal No.73/2017 admitted on 21.4.2017 "Whether on the facts and in the circumstances of the case and in law the ITAT was justified law in upholding the order of CIT(A) in deleting the addition of Rs. 71377130/- made by the Assessing Officer on account of disallowance of claim of deduction under section 80IB(10) without appreciating the fact that the 'built up area' of the villas constructed by the assessee is 1772.81 Sq. Ft. that exceeds the limit of 1500 Sq. Ft. thereby ignoring the definition as given in section 80IB(14) (a) of the Income Tax Act, 1961?" 3.3 Appeal No.166/2017 admitted on 16.8.2017 "Whether on the facts and in the circumstances of the case and in law the ITAT was justified law in upholding the order of CIT(A) in deleting the addition of Rs. 10043117/- made by the Assessing Officer on account of disallowance of claim of deduction under section 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Legislature made substantial changes in Sub-section (10). Several new conditions were incorporated for the first time, including the condition mentioned in Clause (d). This condition/restriction was not on the statute book earlier when all these projects were sanctioned. Another important amendment was made by this Act to Sub-section (14) of Section 80IB with effect from 1.4.2005 and for the first time Under Clause (a) thereof the words 'built-up area' were defined. Section 80IB(14)(a) 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; 24. Prior to insertion of Section 80IB(14)(a), in many of the rules and Regulations of the local authority approving the housing project "built-up area" did not include projections and balconies. Probably, taking advantage of this fact, builders provided large balconies and projections making the residential units far bigger than as stipulated in Section 80IB(10), and yet clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dictionary (Unabridged) as unroofed platform projecting from the wall of a building, enclosed by a parapet or railing, and usually resting on brackets or consoles. It is often used as synonyms to gallery, loggia, veranda, piazza, porch, portico, stoop etc. In the context of residential or even commercial complexes, term 'balcony' has gained a definite common parlance meaning. It usually consists of a projection from a building covered by a parapet or railing and may or may not but usually is covered from the top. This term 'balcony' certainly would not include an open terrace adjoining a bedroom or any other constructed area of a penthouse. The terrace is not a projection. 7.2 In Commissioner of Income Tax vs. Mahalakshmi Housing [2014] 222 Taxmann 356 (Madras), it has been held as under :- 6. As far as the issue in respect of inclusion of open terrace area with the built up area is concerned, we had already held the said issue against the Revenue in our decision rendered in T.C. Nos. 581, 1186 of 2008 and 136 of 2009 - Ceebros Hotels Pvt. Ltd. v. Deputy Commissioner of Income Tax dated 19.10.2012 and accordingly, the order the Tribunal is set aside. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o mention that the tribunal being the last fact finding authority has observed as under:- "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 residential units is less than 1500 sq. ft. and consequently, the assessee is eligible for deduction u/s 80IB(10). These grounds are allowed." There is no dispute with regard to the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Spanish. This is an outdoor extension that can be occupied by lots of people and is beyond ground level. A terrace has more space and with an open-top. We find that the definition of built up are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's case came up for consideration in T.C.Nos.581, 1186 of 2008 and 136 of 2009 in the case of Ceebros Hotels P\It. 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} deduction, the assessee should have owned the property is concerned, the same is liable to be rejected by reason of our decision rendered in T.C.Nos. 581, 1186 of 2008 and 136 of 2009 - CEEBR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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'ble High Court referred to the Indian Standard Method of Measurement of Plinth, Carpet and Rentable Areas of Buildings as issued of Bureau of Indian Standards and also the meaning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sitation in agreeing with the assessee's contention that open terrace area, even if be private terrace cannot form part of the builtup 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 'builtup area' in a case where such terrace is a projection attached to the residential unit and there being no room under such terrace, even if the same is available exclusively for use of the respective unit- holders." 10. Even the judgment of Gujarat High Court in Amaltas Associates (supra ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
