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2016 (3) TMI 84
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.... The assessee had undertaken a housing project styled as Ashiana Amarbagh Jodhpur, in Phase -I, stituated at Village -Kudi Bhagtasani, Jodhpur Pali Road, Jodhpur - 342001, Rajasthan. The assessee claimed deduction u/s 80IB(10) of the Act in respect of profits derived from this housing project. The Learned AO observed that the assessee filed audit report in Form 10CCB, copy of completion certificate from the Architect, project layout, project brochure giving area details of the residential units, possession letter copies, accounts for the project along with other details. The Learned AO disallowed the deduction claimed by the assessee u/s 80IB(10) of the Act on the following three grounds :- • Completion certificate of building has not been obtained by the assessee from local authority but instead obtained only from an Architect thereby violating the provisions of Explanation (ii) to section 80IB(10)(a) of the Act ; • Size of residential units is more than 1500 sq.ft including the terrace area thereby violating the provisions of section 80IB(10)(c ) of the Act ; • Built up area of commercial establishment included in the project is higher than ....
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....ntial project when the appellant has duly fulfilled the conditions stated in the said Act. The observation of the learned CIT(A) on this ground is not correct and misleading the fact of the case. 5) That on the facts and in the circumstances of the case, the CIT(A) has erred in confirming the interest levied by the Assessing Officer under the provisions of section 234B of the Act. 6) That the appellant craves leave to add any additional grounds and / or amend, alter, modify or rescind the grounds herein above before or at the hearing of the appeal. 4. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee. We feel that each of the issue based on which the revenue had rejected the claim of deduction u/s 80IB(10) of the Act needs to be addressed independently as below:- 4.1. Completion certificate not obtained from local authority as contemplated in section 80IB(10) of the Act The Learned AR argued that the assessee after completion of construction of Phase I and Phase 1A of the project had applied for completion certificate to Jodhpur Development authority, the local authority, who i....
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...., Jodhpur-342001 Sub: Completion Certificate of Phase I, Ashiana Amerbagh, A Housing Project of Ashina Amarbagh Developers At Village Kuri Bhagtasani, Fatwar Jhalamand, Tehsil & District Jodhpur, Rajasthan This is to verify that construction of Phase I of Ashiana Amarbag comprising of 95 dwelling units bearing no. E-16 to E-30, N-01 to N-08, N-35 to N-50, N-77 to N-84, S-01 to S-12, S-36 to S-59, S-86 to S-97 situated at Village Kuri Bhagtasani, Patwar Jhalamand, Tehsil & District Jodhpur, Rajasthan have been completed in all respect as per approved drawing & as per norms of Building Bye Laws. This is to further certify that the project Ashiana Amarbagh, Phase I is fit for residential use with all facilities. Sd/- Biswajit Sengupta Regd Architech: CA/75/886 BISWAJIT SENGUPTA B.Arch., P/IA. Regd. Architect CA/7B/BBC" 4.1.2. It would also be pertinent to reproduce the bye laws of Jodhpur Development Authority which has been placed on record by the Learned AR wherein it has been stated as under:- "15. Completion certificate :- 15.1 On completion of building having a height of....
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....iance is also placed on the decision of Hon'ble Karnataka High Court in the case of CIT vs Ittina Properties (P) Ltd in ITA No. 556 of 2013 dated 15.7.2014 , wherein it was held that : 6. One of the project has been sanctioned subsequent to the Act. The point of controversy is regarding the date on which the project was completed to be eligible for the benefit of the said provision. The revenue contends, the completion certificate issued by the Village Panchayat is not valid and therefore the assessee is not entitled to the said benefit. Admittedly the plan is sanctioned by the BDA. The BDA has not issued any completion certificate. The reason being, in the BDA Act or the Karnataka Municipal Corporation Act, there is no provision for issue of completion certificate. The provision in the Karnataka Municipal Corporation Act is for issuance of occupancy certificate. When the statute does not provide for issue of a completion certificate, if the authorities were insisting on such certificate, the assessee has gone to the Vilalge Panchayat within whose limits the property is situated and has obtained the completion certificate and has produced the same for availing the benefit.....
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.... of the Act on this ground by the Learned AO is not in order. 4.2. Built up area exceeding 1500 sq.ft including terrace area We find that the meaning of the term 'built up area' is given in section 80IB(14)(a) of the Act as under : 'built up area' means the inner measurements of the residential unit at the floor level, including the projection and balconies, as increased by the thickness of the walls but does not include the common areas shared with other residential units. The Learned AR argued that the areas such as lobby, staircase, terrace, etc are not included while measuring built up area of a residential unit. The super built up area is inclusive of built up area and other common facilities shared with other residential units. He argued that the terrace is outside the inner measurement and it cannot be taken in the calculation of built up area. The inner measurement of a residential unit should only be taken for calculation of built up area. The built up area of each unit is within 1500 sq.ft. He further argued that as per the National Building Code of India, the definition of Plinth Area and Covered Area are given separately which also supports the above f....
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....d 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 Spanish. This is an outdoor extension that can be occupied by lots of people and is beyo....
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....peal 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 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 area 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 pro....
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.... 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 'built-up 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 t....
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....standing 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 there ....
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....d and marketed on the Project Land and more fully described in Article 5.0 hereunder. Article 5.0 - PROJECT 5.1. The Project of the Firm shall be to design, develop and construct a Commercial and residential colony on the Project Land consisting of several units. We find from this partnership deed that the parties hereto have agreed to develop the project land measuring 11 Bighas in partnership on the terms and conditions stated thereunder. We also find from this partnership deed that Miras Partners have formulated a plan and project for development of the land in accordance with a lay out plan and such lay out plan has been approved by the Director of Town Planning, Jodhpur. The said lay out plan envisages construction of wholly commercial and residential colony on the Eastern portion of the Land measuring about 11 Bighas less 3000 Yards (the Project Land) and bordered in green colour in the said lay out plan and the land which shall remain with the Miras Properties Pvt Ltd is bordered in Red Colour. We also find from the revised sanctioned plan clearly demarcating the commercial area which is a shopping complex that were sold to other parties by the land owne....