2017 (11) TMI 1212

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..... ft. The Revenue in its appeal has assailed the findings of Commissioner of Income Tax (Appeals) in allowing deduction u/s. 80IB(10) on pro-rata basis in respect of eligible units. 3. Shri Sunil Ganoo appearing on behalf of the assessee submitted that this is second round of litigation for assessment year 2007-08 before the Tribunal in respect of housing project 'Shyama Heritage'. Earlier, the assessee approached Tribunal in ITA No. 1136/PN/2011 for assessment year 2007-08, against denial of deduction u/s. 80IB(10) on account of excessive area earmarked for commercial establishment and in respect of built up area exceeding 1500 sq. ft. of row house near H building. The Coordinate Bench of the Tribunal allowed assessee's claim qua commercial area. However, with respect to computation of built up area of row house, the matter was remitted back to Commissioner of Income Tax (Appeals) for fresh adjudication. The ld. AR submitted that the project was approved prior to 31-03-2005. The definition of 'built up area' was not available under the provisions of the Act prior to March, 2005. The definition was inserted by Finance (No. 2) Act, 2004 w.e.f. 01-04-2005. The ld. AR submitted ....

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....80IB(10) in respect of eligible units. There is no provision u/s. 80IB(10) for granting proportionate deduction in respect of eligible units. 5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The solitary issue raised by the assessee in appeal is with respect to disallowance of deduction u/s. 80IB(10) on row house, near H building in housing project Shyama Heritage. The authorities below have rejected assessee's claim of deduction u/s. 80IB(10) in respect of aforesaid row house on the ground that the built up area of the said house including projected terrace exceeds the statutory limit of 1500 sq. ft. The matter was referred to DVO. The DVO computed the total area of house as 142.81 sq. mtrs. i.e. 1537.21 sq. ft. The floor wise area computed by DVO is as under :   Sq. Mtrs. Sq. ft. Ground Floor 65.83 708.89 First Floor 65.78 708.05 Sub Total 131.61 1416.94 Projected Terrace 11.20 120.55 Total 142.81 1537.49   6. The project of the assessee was approved prior to 31-03-2005. The built up area was not defined prior to March, 2015. Th....

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....nits. This exclusion clause of the common areas shared by other units cannot be applied in the reverse. In other words, the moment a certain area is not shared but is exclusively assigned for the use of a particular residential unit holder, would not mean that such area would automatically be included in the builtup area. In order to be part of the builtup area, the same must be part of the inner measurements of a residential unit or projection or balcony. The open terrace space on the top floor of a building would not satisfy this description. It will also not be covered in the expression balcony. Term 'balcony' has been explained in Webster's Third International 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 c....

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....inition given under Section 80-IB (14) does not appear to go against what has been defined to include the measurement of the plinth area of building under the Building Regulations and Indian Standard Method of Measurement of Plinth, Carpet and Rentable Areas of Buildings as issued by Bureau of Indian standard. Since, Clause 4.1.2 clearly excludes open terrace for plinth area and what is included in Clause 4.1.1. is as stated in Clause (d), which reads as under : "e) In case of open verandah with parapats: 1) 100 percent areas for the portion protected by the projections above, and 2) 50 percent, area for the portion unprotected from above." Revenue does not dispute the fact that the open terrace is not a project-ion like a balcony to fit in with the definition under Section 2.4 of Indian Standard Method of Measurement of Plinth, Carpet and Rentable Areas of Buildings as issued by Bureau of Indian Standard. 32. Thus, going by the definition under Indian standard Method of Measurement of Plinth, Carpet and Rentable Areas of Buildings, even by making a reference to the definition of "Built-up area" under Sub-Section 14 (a) as applicable to the year ....

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...., but, were excluded in the built-up area, the Income Tax Authority cannot add Balcony as built-up area and deny the benefit to the assesses. 35. The Karnataka High Court further pointed out that as per Section 80-IB (10), the Housing project must be one approved by a local authority. In respect of the approval obtained prior to 01.04.2005, if Sub- Section 14 (a) of Section 80-IB has to be held applicable, then, the assesses has to necessarily seek for a modified plan. Once, a valid approval is obtained and the building is constructed in all respects prior to 01.04.2005, then, the assesses would be entitled to the benefit of Section 80-IB. This is irrespective of the date of sale, that is, even if it is subsequent to 01.04.2005, the assesses has to have the benefit of Section 80-IB. As far as the introduction of definition of "Built-up area" in Subjection 14 {a) of Section 80- IB, under Finance (No.2) Act, 2004 is concerned, the Karnataka High Court held that having regard to the fact that they came into force from 01.04.2005, the same will have relevance to those Housing Projects, which were approved subsequent to 01.04.2005. 36. We agree with the views expressed....

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....learned CIT-DR has raised the said issue though she has fairly conceded that such a finding was not emerging from the orders of the lower authorities. Be that as it may, the Hon'ble High Court has noted and dealt with the said argument in the following words :- "29. Thus, in the face of terrace being an open area, not being a projection and hence, not included in the plinth area, the question herein is as to whether the Tribunal is justified in confirming the order of assessment to include the terrace area into the built-up area solely by reason of the fact that the assessee had sold it to purchasers of the 7th floor as a private terrace. 30. We do not think, the Tribunal is justified in taking the view that open terrace would form part of the built-up area for the purpose of subclause (c) of section 80-IB(10). As already seen in the preceding paragraphs, an assessee having an Approved Plan project alone has the right to claim deduction under section 80-IB. Any project undertaken not approved by the Local Authority is outside the purview of the Act. Thus, when a Local Authority, endowed with the jurisdiction to grant the approval is guided in its approval by Regul....