TaxTMI 
TaxTMI 
2016 (3) TMI 320
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....d, these appeals are being disposed of by this common order for the sake of convenience. Assessees' Appeals: ITA Nos.1565,1566 & 1567/Hyd/2013 2. The only effective grievance of the assessees in these appeals is with regard to denial of the claims for relief under S.80IB(10) of the Income Tax Act, 1961, on the ground that the built up area of each residential unit exceeded 1,500 sq. ft. 3. Facts of the case in brief, as taken from the appeal folder for assessment year 2009-10 in respect of ITA No.1566/Hyd/2013( M/s. Modi Shelters Private Limited), are that the assessee company engaged in the business of real estate development has filed its return of income for the assessment year 2009-10 on 26.9.2009 admitting an income of Rs. 1,23,038. In the course of assessment proceedings, it was noticed that the assessee admitted income from business to the extent of Rs. 1,99,06,201 and claimed deduction of Rs. 1,97,83,163 under S.80IB(10) of the Act, thereby showing taxable income at Rs. 1,23,038. Since the available gross total income was higher than the admissible deduction, the entire deduction worked out has been claimed under S.80IB(10). On going through the computation of e....
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.... above do not qualify for deduction under S.80IB(10) of the Act, and accordingly, disallowed the claim of the assessee for deduction of Rs. 1,97,83,163 under S.80IB(10). 5. On appeal, the CIT(A) also, following the appellate orders on this issue, including the decisions of this Tribunal, upheld the disallowance made by the Assessing Officer. 6. In respect of the other two appeals in this bunch as well, facts relating to the issue in dispute are identical except for the amounts involved and hence, the same need not be narrated over again. 7. Aggrieved by the orders of the CIT(A), confirming the disallowance of the assessee's claims for deduction under S.80IB(10), assessees have preferred these appeals before us. 8. We have heard the parties and perused the material on record, including the paper-books filed by the assessee. We have also gone through the written submissions filed by the assessee. The condition stipulated in the Act so as to make an assessee eligible for relief under S.80IB(10), is that in the residential projects constructed, the residential unit has a built up area not exceeding 1000 sq. ft, where such unit is situated within the cities of Delhi or Mumba....
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.... measuring the built-up area of each residential unit. If the portico and balcony area is added, the built-up area would exceed 1500 sq. ft. per unit. As per the definition as stated in section 80IB(14)(a) built-up area includes projection and balcony. Accepted rules of interpretation for and inclusive definition as elucidated by the Hon'ble Supreme Court in the case of CIT vs. Tajmahal Hotel (1973) CTR (SC) 480; AIR 1972 (SC) 168 is that if the word "include" is used in an interpretative clause, it must be construed as apprehending not only such as it signifies to its nature and merit, but also things which the interpretative clause declares what they shall include. So normal meaning of built-up area, but for the definition include projection and balcony, would definitely exclude the later. Therefore, there can be no doubt that prior to the introduction of the definition aforesaid clause built-up area would not include projections and balcony as normally understood. However, after the enactment itself clearly specifies that built-up area includes both projections and balconies as increased by the thickness of walls and does not include common area shared with others. This definiti....
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....plied as they stand. 13. Being so, we cannot adopt meaning as contended by the learned counsel for the assessee. In our opinion, built-up area includes portico and balcony also and in this case it exceeds 1500 sq. ft. per residential unit. Accordingly the assessee is disen- titled for the benefit u/s. 80IB of the Act. The order of the CIT(A) is upheld on this issue. 14. In the result, the appeal of the assessee is dismissed." 4. Being so, in view of the above order of the Tribunal, we are inclined to dismiss the ground relating to 80IB(10) of the Act.". In the absence of any decision to the contrary brought to our notice by the Revenue, consistent with the view taken by the coordinate benches of this Tribunal in similar matters, including in the cases of the assessees herein as well, we find no infirmity in the impugned orders of the Revenue authorities on this issue. Even though learned counsel for the assessee reiterated the stand of the assessee and pleaded that car parking area and first floor terrace, which is open to sky should be excluded in computing the area of the residential unit, as is evident from the orders of the Tribunal, such arguments....
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....ncome under the Act. If either of those conditions is absent, the section 14A will have no applicability. In this connection it is pertinent to note that there are investments made by the assessee during the year. Further, the assessee has taken loans towards which interest expenditure has been incurred. The investments made are of such a nature that the income there from would not have formed part of total income taxable in the hands of the assessee in the normal course. Therefore, the investments not resulting in income for a particular year would not imply that expenditure on account of such investments cannot be quantified as laid down under rule 8D and be not disallowed. 4.4 As per sciton14A of the Act, where the assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this, the Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed. Rule 8D of the Income-tax Rules, 1962 (hereinafter referred to as the 'Rules') lays down the method of calcula....
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....ects in the light of the provisions of S.14A and the case-law on the point, the CIT(A) held that in the absence of any nexus between the investments made and the borrowed funds, no amount of interest expenditure can be related to the investments made, and consequently no disallowance can be made as expenditure incurred for earning exempt income. The relevant observations of the CIT(A) in para 7.1 of the impugned order read as follows- "7.1 From the above, it is clear that the appellant does not have any income which does not form part of the total income nor has the appellant made such a claim and also the investments had been made by appellant from its own funds and no part of borrowed funds had been used for purpose of making investment any time during the previous year. In view of the above and also relying on the decisions cited above, I hold that no disallowance under Section 14A read with Rule 8D can be made for the relevant assessment year, and accordingly, I direct the Assessing Officer to delete the addition." The CIT(A) accordingly, finding no nexus between the borrowals made resulting in interest expenditure incurred and the investments made by the assessee r....