Tribunal allows appeal for deduction under Section 80IB(10) in favor of assessee

The Tribunal allowed the appeal, ruling in favor of the assessee on both issues. Firstly, the assessee was deemed eligible for claiming deduction under Section 80IB(10) despite filing the return beyond the due date specified under Section 139(1) but within the extended period under Section 139(4). Secondly, the built-up area of the four residential units was found to be within the prescribed limit under Section 80IB(10) when terraces were excluded from the calculation.

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Issues Involved:
1. Eligibility for claiming deduction under Section 80IB(10) when the return of income is filed beyond the due date specified under Section 139(1) but within the extended period under Section 139(4).
2. Determination of built-up area for four residential units and its compliance with Section 80IB(10).

Detailed Analysis:

1. Eligibility for Claiming Deduction under Section 80IB(10):

The core issue was whether the assessee is eligible for claiming deduction under Section 80IB(10) if the return of income was filed beyond the due date specified under Section 139(1) but within the extended period specified under Section 139(4). The provision of Section 80AC mandates that unless the return of income is furnished on or before the due date specified under Section 139(1), the assessee would not be admissible for deduction under Section 80IB of the Act.

The assessee argued that the return was filed within the extended time allowed under Section 139(4) due to disputes among directors and non-cooperation from auditors. Several judgments were cited to support the claim that the extended time under Section 139(4) should be considered as within the due date under Section 139(1). The Tribunal noted that different High Courts had divergent views on this matter. The Andhra Pradesh High Court, in the case of CIT Vs. Sri S. Venkataiah, held that the claim of deduction should not be denied on technicalities if the return is filed within the extended time under Section 139(4). On the other hand, the Calcutta High Court in CIT Vs. Shelcon Properties and the Uttarakhand High Court in Umesh Chandra Dalakoti Vs. ACIT held that the return must be filed within the due date specified under Section 139(1) to be eligible for the deduction.

Given the conflicting judgments and following the principle that in the absence of a jurisdictional High Court decision, the view favoring the assessee should be adopted, the Tribunal decided in favor of the assessee, allowing the deduction under Section 80IB(10).

2. Determination of Built-up Area:

The second issue was whether the built-up area of four residential units (D-601, D-602, E-601, and E-602) exceeded 1500 sq. ft., making them ineligible for deduction under Section 80IB(10). The authorities below included the area of the terrace while computing the built-up area, which led to the conclusion that the area exceeded 1500 sq. ft.

The definition of "built-up area" under Section 80IB(14) includes the inner measurements of the residential unit at the floor level, including projections and balconies but does not explicitly mention terraces. The Gujarat High Court in CIT Vs. M/s. Amaltas Associates held that the term 'balcony' does not include an open terrace adjoining a residential unit. The Tribunal referred to the building plan and observed that the open area adjoining the living room and bedroom was a 'terrace' and not a 'balcony'. Since the definition of 'built-up area' does not include terraces, the Tribunal concluded that the built-up area of the flats in question did not exceed 1500 sq. ft.

Thus, the Tribunal decided in favor of the assessee on the second issue as well, allowing the deduction under Section 80IB(10) for the four residential units.

Conclusion:

The appeal was allowed, with the Tribunal holding that the assessee is eligible for claiming deduction under Section 80IB(10) despite filing the return within the extended period under Section 139(4) and that the built-up area of the residential units did not exceed the prescribed limit when terraces were excluded from the calculation.

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