TaxTMI 
TaxTMI 
2012 (7) TMI 87
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....lats, the built-up area of which was not more than 1500 sq. ft. 2. The assessee is a partnership firm engaged in the business of construction and sale of flats. The assessee entered into joint development agreement with Sri Mahaveer Renka a residential project called 'Paramount Raghavendra Ariaht; which consists of 160 flats. The assessee had claimed deduction of the entire net profit (c)f Ra,36 crores relating to the said residential complex under Section 80-IB (10) of the Act for the assessment year 2007-2008, which was rejected by the assessing authority for the reason that the built-up area of some of the flats exceeded 1500 sq.ft. The said order was challenged before the Commissioner of Income Tax (Appeals}. This Appellate Authority....
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....ed in giving his report by including the common areas shared with other flats and even those area which are not part of flat measurement are included in the flat measurement. The assessee also enclosed a report from a private valuer showing plinth area of these flats as less than 1500 sq.ft. He also specifically pointed out the areas to be excluded. These submissions of assessee along with their valuers report were forwarded to the DVO inviting their comments. After re-inspection of the building, the DVD Bangalore submitted his comments in his letter dated 28.03.2008. With regard to built-up area i.e. Plinth area he revised tins figures and shown flat area excluding covered balcony/covered garden/covered passage in respect of duplex flats a....
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....plex flat of 1484 would be increased with the balcony area of the flat in the mezzanine floor. Half of the area of this balcony which comes to 278.30 Sq. ft should be clubbed with floor area and then the built-up area of A-1 duplex flat would be 1762.3 Sq.ft, the built-up, adjoining duplex flat A-2 calculated in this manner would be also 1762.3 Sq. ft, Similarly, if, proportionate balcony area is added to flats bearing Nos. 3 & 4 of block A, 5,6, 7 & 8 of block B 1,2,3 & 4 of block C 5, 6, 7 & 8 of block D, the build-up area including half the area of the balcony exceed 1500 sq.ft. The assessing authority refused to treat the balcony area in respect of A-1 and A-2 flats on the ground that other flat owners have no access and access is only ....
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....red with other residential units has to be excluded for the purpose of calculating built-up area to extend the benefit of Section 80-IB (10) of the Act. Once this balcony area is excluded none of the flats built-up area exceeds 1500 sq.ft. Therefore, the assessee is entitled to the said provision completely, though the Appellate Authorities have denied the said benefits to 16 flats. Therefore, he submits that no case for interference is made. 6. Therefore the substantial question of law that arise for consideration in this appeal is- "To be eligible for exclusion from the built-up area, whether the common areas have to be shared with all the residents, who have occupied the residential units, or even if it is ....
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.... the assessee would be entitled to the benefit flowing from the aforesaid provision. By a subsequent amendment the project approval by the local Authority was extended to 31.3.2008. The object of the aforesaid tax concession is to provide tax benefit to the person undertaking the investment risk i.e., the actual developer. However, any person undertaking pure contract risk is not entitled to the tax benefits. With a view to clarify accordingly; an Explanation after sub-section (1) of Section 80-IB has been inserted so as to provide that nothing contained in sub-section shall apply to any undertaking which executes the housing project as a works contract awarded by any other person including Central or State Government This amendment has bee....
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....ilt- up area means the inner measurement 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. " 8. Therefore the intention m clear. In calculating the built-up area it is only the inner measurements of the residential unit on the floor level, which has to be taken into consideration.. If there are any projections and balconies and if it exclusively belongs to the residential units, then, that also has to be taken into consideration for deciding the built-up area. However, if the residential unit is provided the facility of common area shared with other residential units such common area hav....