M/s Ashiana Amar Developers, Kolkata V. Income Tax Officer -ward 33(1), Kolkata, Kolkata

ITA 12/KOL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3465 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 20-08-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 03-01-2014
• Court: TRIBUNAL
• Department Lawyers: ASSESSMENT YEAR AGAINST
• Keywords: Residential status; Benefit of exemption
• Section: 143(3); 234B; 80IB; 10B

Judgement Text

ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 1 IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, K OLKATA BEFORE : SHRI MAHAVIR SINGH , JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 12/KOL/2014 ASST YEAR 2010-11 M/S. ASHINA AMAR DEVELOPERS VS. INCOME TAX OF FICER PAN: AANFA5587H WARD 33(1), KOLKATA (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI SUBASH AGARWAL,& MISS VARSHA JALAN, ADVOCATES, LD.ARS OF THE ASSESSEE RESPONDENT: SHRI UDAY KR. SARDAR, JCIT/LD. SR.DR DATE OF HEARING: 31-12-2015 DATE OF PRONOUNCEMENT: 22 -01- 2016 ORDER SHRI M.BALAGANESH, AM THIS APPEAL OF THE ASSESSEE ARISES OUT OF THE ORD ER OF THE LEARNED CIT(A)-XIX, KOLKATA IN ITA NO.446/CIT(A)-XIX/WARD-33(1)/KOL/12- 13 DATED 21-10-2013 FOR THE ASSESSMENT YEAR 2010-11 AGAINST THE ORDER OF ASSE SSMENT FRAMED BY THE LEARNED AO U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IB(10) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASS ESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION AND SALE OF FLATS BY DEVELOPING AND BU ILDING HOUSING PROJECTS. THE ASSESSEE HAD UNDERTAKEN A HOUSING PROJECT STYLED AS ASHIANA AMARBAGH JODHPUR, IN PHASE I, STITUATED AT VILLAGE -KUDI BHAGTASANI, J ODHPUR PALI ROAD, JODHPUR 342001, RAJASTHAN. THE ASSESSEE CLAIMED DEDUCTION U/S 80 IB(10) OF THE ACT IN RESPECT OF ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 2 PROFITS DERIVED FROM THIS HOUSING PROJECT. THE LE ARNED AO OBSERVED THAT THE ASSESSEE FILED AUDIT REPORT IN FORM 10CCB, COPY OF COMPLETIO N CERTIFICATE FROM THE ARCHITECT, PROJECT LAYOUT, PROJECT BROCHURE GIVING AREA DETAIL S 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 OBT AINED BY THE ASSESSEE FROM LOCAL AUTHORITY BUT INSTEAD OBTAINED ONLY FROM AN ARCHITECT THEREBY VIOLATING THE PROVISIONS OF EXPLA NATION (II) TO SECTION 80IB(10)(A) OF THE ACT ; SIZE OF RESIDENTIAL UNITS IS MORE THAN 1500 SQ.FT I NCLUDING THE TERRACE AREA THEREBY VIOLATING THE PROVISIONS OF SECTION 80 IB(10)(C ) OF THE ACT ; BUILT UP AREA OF COMMERCIAL ESTABLISHMENT INCLUDED IN THE PROJECT IS HIGHER THAN 3% OF THE AGGREGATE AREA AND MORE THAN 5000 SQ.FT THEREBY VIOLATING THE PROVISIONS OF SECTION 80IB(10)(D) OF THE ACT. THE ACTION OF THE LEARNED AO WAS UPHELD BY THE LEAR NED CITA. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GR OUNDS:- 1) THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) HAS ERRED IN \ CONFIRMING THE DISALLOWANCE M ADE BY THE A.O. FOR DEDUCTION CLAIMED BY THE APPELLANT UNDER THE PROVIS IONS OF SECTION 80- IB(10) OF THE INCOME TAX ACT, 1961 FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE OBSERVATIO N OF THE LEARNED CIT(A) IN THIS REGARD IS WRONG AND MISLEADING. 2) THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) HAS ERRED IN DISALLOWING THE DEDUCTION CLAIM ED U/S 80-IB(10)(A) OF THE ACT ON THE ALLEGED GROUND THAT THE APPELLANT HA D NOT OBTAINED THE COMPLETION CERTIFICATE FROM THE LOCAL AUTHORITY WHE REAS THE APPELLANT HAD DULY FULFILLED THE CONDITION STATED IN THE AFORESAI D SECTION OF THE ACT. THE CIT (A) HAD ERRED IN NEGLECTING THE CERTIFICATE ISS UED BY THE LOCAL AUTHORITY AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OF FICER WITHOUT ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 3 CONSIDERING THE FULL FACTS OF THE CASE. THE APPELLA NT DENIES THE OBSERVATION AND FINDINGS OF THE LEARNED CIT (A). 3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE CIT (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE A. O. FOR THE DEDUCTION CLAIMED BY THE APPELLANT U/S 80-IB (10)(C) ON THE G ROUND THAT APPELLANT HAS VIOLATED THE RESTRICTIONS OF THE BUILT UP AREA OF T HE RESIDENTIAL UNITS WHICH SHOULD BE MAXIMUM AT LS00 SQUARE FEET AT PLACES OTH ER THAN CITIES OF DELHI AND MUMBAI. THE CIT(A) HAS WRONGLY CONFIRMED THE RE -CALCULATION OF THE BUILT UP AREA MADE BY THE A.O. WITHOUT CONSIDERING THE FULL FACTS OF THE CASE. THE DISALLOWANCE MADE BY THE CIT(A) ON THIS G ROUND IS NOT CORRECT AND MISLEADING THE FACT OF THE CASE. 4) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE CIT (A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE A.O. U /S 80-IB(10)(D) OF THE ACT ON THE ALLEGED GROUND THAT THE APPELLANT HAS VI OLATED THE CONDITIONS STATED IN CLAUSE(D) OF SUB-SECTION(10) OF SECTION 8 0-18 IN RELATION TO BUILT-UP AREA OF THE SHOPS AND OTHER COMMERCIAL ESTABLISHMEN TS INCLUDED IN THE HOUSING PROJECT EXCEEDING THE SPECIFIED PERCENTAGE OF THE BUILT UP AREA OF THE RESIDENTIAL PROJECT WHEN THE APPELLANT HAS DULY FULFILLED THE CONDITIONS STATED IN THE SAID ACT. THE OBSERVATION OF THE LEAR NED 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 TH E CASE, THE CIT(A) HAS ERRED IN CONFIRMING THE INTEREST LEVIED BY THE ASSE SSING OFFICER UNDER THE PROVISIONS OF SECTION 234B OF THE ACT. 6) THAT THE APPELLANT CRAVES LEAVE TO ADD ANY ADDIT IONAL 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 DEDUCTI ON U/S 80IB(10) OF THE ACT NEEDS TO BE ADDRESSED INDEPENDENTLY AS BELOW:- 4.1. COMPLETION CERTIFICATE NOT OBTAINED FROM LOCA L AUTHORITY AS CONTEMPLATED IN SECTION 80IB(10) OF THE ACT ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 4 THE LEARNED AR ARGUED THAT THE ASSESSEE AFTER COMPL ETION OF CONSTRUCTION OF PHASE I AND PHASE 1A OF THE PROJECT HAD APPLIED FOR COMPLET ION CERTIFICATE TO JODHPUR DEVELOPMENT AUTHORITY, THE LOCAL AUTHORITY, WHO IS IN CHARGE OF ISSUE OF SUCH CERTIFICATE. IN REPLY TO THE SAID APPLICATION, THE SAID AUTHORITY INFORMED THE ASSESSEE THAT COMPLETION CERTIFICATE IS ISSUED TO SUCH BUILD INGS WHICH ARE ABOVE THAN 15 METERS IN HEIGHT AND STATED THAT FOR OFFICIAL PURPOSES, A CERTIFICATE FROM REGISTERED ARCHITECT WOULD SUFFICE. ACCORDINGLY THE ASSESSEE SOUGHT TO OBTAIN A COMPLETION CERTIFICATE FROM A REGISTERED ARCHITECT. IT WOULD BE PERTINENT TO REPRODUCE THE LETTER OF JODHPUR DEVELOPMENT AUTHORITY ADDRESSED TO THE ASSESSEE EXP RESSING THEIR INABILITY TO ISSUE THE COMPLETION CERTIFICATE FOR THE HOUSING PROJECT OF T HE ASSESSEE AS BELOW:- OFFICE OF JODHPUR DEVELOPMENT AUTHORITY, JODHPUR SERIAL NO. 1624 DATE 9/12/10 ASHIANA AMAR DEVELOPERS PALI ROAD JODHPUR, SUBJECT : IN RESPECT OF ISSUANCE OF A COMPLETION C ERTIFICATE REF : YOUR LETTER DATED 18.02.2010 & 14.06.2010 YOU HAVE REQUESTED FOR ISSUANCE OF COMP LETION CERTIFICATE IN RESPECT OF THE RESIDENTIAL PROJECT, ASHIANA AMAR DEVELOPERS PH ASE- 1 AND LA VIDE YOUR LETTER DATED 18.02.2010 AND 14.06.2010. WITH REFERENCE TO YOUR ABOVE MENTIONED LETTERS, IT IS INTIMATED TO YOU THAT AS PER RULE 16 OF THE HOUSING BYE-LAWS, THE PROVISION OF G RANTING OF 'COMPLETION CERTIFICATE' IS IN RESPECT OF CONSTRUCTION OF HOUSE S HAVING. HEIGHT OF ABOVE 15 METRES. AS PER YOUR LETTER, SINCE THE HEIGHT OF THE HOUSES CONSTRUCTED IN YOUR RESIDENTIAL PROJECT IS LESS THAN 15 METRES, THE SAME DOES NOT F ALL WITHIN THE PURVIEW OF THE REQUIREMENT OF THE ISSUE OF 'COMPLETION CERTIFICATE S' AS PROVIDED IN THE HOUSING BYE-LAWS. THUS, THERE IS NO NECESSITY TO ISSUE COMPLETION CER TIFICATE FOR YOUR RESIDENTIAL PROJECT. IF YOU WANT, YOU CAN OBTAIN A COMPLETION C ERTIFICATE FROM A REGISTERED ARCHITECT OR ENGINEER. ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 5 EXECUTIVE ENGINEER (SOUTH) JODHPUR DEVELOPMENT AUTHORITY JODHPUR 4.1.1. WE FIND THAT THE REGISTERED ARCHITECT HAD I NDEED GIVEN THE COMPLETION CERTIFICATE VIDE LETTER DATED 18.2.2010 WHICH IS R EPRODUCED BELOW:- BISWAJIT SENGUPTA. ARCHITECT B.ARCH.FIIA.,AIIID PH-9887488263 01493-515305 A 305,BLOCK 2, RANGOLI, ASHINA VILLAGE BHIWADI 301019, ALWAR, RAJASTHAN EMAIL: [e-mail] DATED 18 FEB 2010 ASHINA AMAR DEVELOPERS VILLAGE KURI BHAGTASANI, JODHPUR PALI ROAD, JODHPUR-342001 SUB: COMPLETION CERTIFICATE OF PHASE I, ASHIANA AME RBAGH, A HOUSING PROJECT OF ASHINA AMARBAGH DEVELOPERS AT VILLAGE KU RI BHAGTASANI, FATWAR JHALAMAND, TEHSIL & DISTRICT JO DHPUR, 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 JHALAMA ND, TEHSIL & DISTRICT JODHPUR, RAJASTHAN HAVE BEEN COMPLETED IN ALL RESPECT AS PER APPROVED DRAWING & AS PER NORMS OF BUILDING BYE LAW S. 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 ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 6 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 LE ARNED AR WHEREIN IT HAS BEEN STATED AS UNDER:- 15. COMPLETION CERTIFICATE :- 15.1 ON COMPLETION OF BUILDING HAVING A HEIGHT O F MORE THAN 15 METRES, THE BUILDERS HAS TO OBTAIN A COMPLE TION CERTIFICATE. THE SAID CERTIFICATE WILL BE GIVEN BY THE COMPETEN T AUTHORITY ONLY AFTER NECESSARY VERIFICATION AND ACCORDING TO THE FOLLOWING PROCEDURES. 4.1.3. WE FIND FROM THE ABOVE CORRESPONDENCES THAT THE ASSESSEE HAD DULY APPLIED FOR THE COMPLETION CERTIFICATE FROM JODHPUR DEVELOPMENT AUTHROITY (I.E LOCAL AUTHORITY) AS PER THE CONDITION LAID DOWN IN SECTION 80IB(10) OF THE ACT IMMEDIATELY AFTER COMPLETION OF THE PROJECT. HOWEVER, THE SAID AUTHO RITY INSTRUCTED THE ASSESSSEE TO TAKE THE COMPLETION CERTIFICATE FROM A REGISTERED ARCHIT ECT FOR OFFICIAL PURPOSES. HENCE IN THIS SCENARIO, THE LEARNED AO INSISTING ON THE CERT IFICATE FROM LOCAL AUTHORITY WOULD ONLY RESULT IN IMPOSSIBILITY OF PERFORMANCE ON THE PART OF THE ASSESSEE. THE WELL KNOWN LEGAL DICTUM LEX NON COGIT AD IMPOSSIBLIA (I. E THE LAW CANNOT COMPEL A MAN TO PERFORM AN ACT WHICH HE COULD NOT P OSSIBLY PERFORM) WHICH HAS BEEN GIVEN DUE CREDENCE BY THE HONBLE SUPREME COURT IN THE CASE OF KRISHNASWAMY S . PD.& ANR. VS UNION OF INDIA & ORS REPORTED IN (2006 ) 281 ITR 305 (SC) , WHEREIN IT WAS HELD THAT THE MAXIM ACTUS CURIAE NEMINEM GARVABIT , I.E ., AN ACT OF COURT SHALL PREJUDICE NO MAN , IS FOUNDED UPON JUSTICE AND GOOD SENSE WHICH SERVES A SAFE AND CERTAIN GUIDE FOR THE ADMINISTRATION OF LAW. THE OT HER RELEVANT MAXIM IS LEX NON COGIT AD IMPOSSIBLIA THE LAW DOES NOT COMPEL A MAN TO D O WHAT HE CANNOT POSSIBLY PERFORM. THE LAW ITSELF AND ITS ADMINISTRATION IS UNDERSTOOD TO DISCLAIM AS IT DOES IN ITS GENERAL APHORISMS, ALL INTENTION OF COMPELLING IMPO SSIBILITIES, AND THE ADMINISTRATION OF LAW MUST ADOPT THAT GENERAL EXCEPTION IN THE CON SIDERATION OF PARTICULAR CASES. ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 7 4.1.4. RELIANCE IS PLACED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS TARNETAR CORPORATION REPORTED IN (2014) 3 62 ITR 174 (GUJ) WHEREIN IT WAS HELD THAT : IT IS EQUALLY TRUE THAT EXPLANATION TO CLAUSE (A) T O SECTION 80IB(10) OF THE ACT LINKS THE COMPLETION OF THE CONSTRUCTION TO THE BUILDING USE PERMISSION BEING GRANTED BY THE LOCAL AUTHORITY. HOWEVER, NOT EVERY CONDITION OF THE STATUTE CAN BE SEEN AS MANDATORY. IF SUBSTANTIAL C OMPLIANCE THEREOF IS ESTABLISHED ON RECORD, IN A GIVEN CASES, THE COURT MAY TAKE THE VIEW THAT MINOR DEVIATION THEREOF WOULD NOT VITIATE THE VERY PURPOSE FOR WHICH THE DEDUCTION WAS BEING MADE AVAILABLE. 4.1.5. RELIANCE IS ALSO PLACED ON THE DECISION OF HONBLE 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 SUBSEQUEN T TO THE ACT. THE POINT OF CONTROVERSY IS REGARDING THE DATE ON WHICH THE P ROJECT WAS COMPLETED TO BE ELIGIBLE FOR THE BENEFIT OF THE SAID PROVISION. THE REVENUE CONTENDS, THE COMPLETION CERTIFICATE ISSUED BY THE VILLAGE PANCHA YAT 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 ISS UED ANY COMPLETION CERTIFICATE. THE REASON BEING, IN THE BDA ACT OR T HE KARNATAKA MUNICIPAL CORPORATION ACT, THERE IS NO PROVISION FOR ISSUE OF COMPLETION CERTIFICATE. THE PROVISION IN THE KARNATAKA MUNICIPAL CORPORATIO N ACT IS FOR ISSUANCE OF OCCUPANCY CERTIFICATE. WHEN THE STATUTE DOES NO T PROVIDE FOR ISSUE OF A COMPLETION CERTIFICATE, IF THE AUTHORITIES WERE INS ISTING ON SUCH CERTIFICATE, THE ASSESSEE HAS GONE TO THE VILALGE PANCHAYAT WITH IN WHOSE LIMITS THE PROPERTY IS SITUATED AND HAS OBTAINED THE COMPLETIO N CERTIFICATE AND HAS PRODUCED THE SAME FOR AVAILING THE BENEFIT. WHETHER THAT CERTIFICATE WOULD SATISFY THE REQUIREMENT OF LAW NEED NOT BE GONE INT O IN THESE PROCEEDINGS BECAUSE, WHEN THE STATUTE DOES NOT PROVIDE FOR ISSU E OF SUCH A CERTIFICATE, IF THE REVENUE INSISTS ON SUCH CERTIFICATE, THE ASSESS EE WOULD BE LEFT WITH NO OPTION EXCEPT TO GET SUCH CERTIFICATE WITH SOME AUT HORITY WHICH WOULD BE CALLED AS A LOCAL AUTHORITY. IN THE FACTS OF THIS CASE, WE ARE OF THE VIEW THAT THE TRIBUNAL HAS RECORDED A FINDING THAT THE BUILDI NG WAS COMPLETED WITHIN THE STIPULATED PERIOD AND THEREFORE DE HORS THIS CE RTIFICATE ISSUED BY THE PANCHAYAT AFTER THE BUILDING IS COMPLETED, THE ASSE SSEE IS ENTITLED TO THE SAID BENEFIT. IN THAT VIEW OF THE MATTER, WE DO NO T SEE ANY MERIT IN THESE APPEALS. ACCORDINGLY, THE APPEALS ARE DISMISSED. ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 8 8. IT IS UNFORTUNATE THAT WHEN THE PARLIAMENT HAS E XTENDED THE BENEFIT OF EXEMPTION FROM PAYMENT OF INCOME TAX TO A BUILDER W HO UNDERTAKES GROUP HOUSING ACTIVITY, THE DEPARTMENT IS NOT WILLING TO EXTEND THE BENEFIT ON THE PRETEXT THAT THE PRODUCTION OF COMPLETION CERTIFICA TE IS A CONDITION PRECEDENT FOR EXTENDING THE BENEFIT. NEITHER UNDER THE BDA A CT NOR UNDER THE KARNATAKA MUNICIPAL CORPORATION ACT NOR UNDER THE KARNATAKA M UNICIPALITIES ACT, THERE IS ANY PROVISION FOR ISSUANCE OF A COMPLETION CERTI FICATE. THERE IS A PROVISION FOR SANCTION OF A PLAN, ISSUE OF A LICENCE, ISSUE O F A COMMENCEMENT CERTIFICATE AND ISSUE OF AN OCCUPANCY CERTIFICATE. IN THOSE CI RCUMSTANCES, IF THE REVENUE WERE TO INSIST ON PRODUCTION OF A COMPLETION CERTIF ICATE, THEY ARE ASKING THE ASSESSEE TO DO SOMETHING WHICH IS IMPOSSIBLE AND WH ICH IS NOT PROPER IN LAW. IT IS HIGH TIME THE REVENUE, KEEPING IN MIND THE RE LEVANT LAW GOVERNING THE STATE OF KARNATAKA, WOULD SUITABLY AMEND THE LAW OR ISSUE APPROPRIATE CIRCULARS ENABLING THE ASSESSES TO COMPLY WITH THE LEGAL REQUIREMENT SO THAT THEY COULD HAVE THE BENEFIT EXTENDED TO THEM BY THE PARLIAMENT. 4.1.6. IT IS ALSO NOT IN DISPUTE THAT THE PROJECT W AS COMPLETED WITHIN THE ALLOTTED TIME FRAME AND POSSESSION CERTIFICATES WERE ALSO DULY FU RNISHED BEFORE THE LEARNED AO. IN VIEW OF THE AFORESAID FINDINGS AND JUDICIAL PRECEDE NTS RELIED UPON, IT COULD BE SAFELY CONCLUDED THAT EXPECTING THE ASSESSEE TO PRODUCE TH E COMPLETION CERTIFICATE FROM A LOCAL AUTHORITY WOULD ONLY RESULT IN IMPOSSIBILITY OF PERFORMANCE ON THE PART OF THE ASSESSEE. ACCORDINGLY, THE REJECTION OF DEDUCTION U/S 80IB(10) 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 COM MON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 9 THE LEARNED AR ARGUED THAT THE AREAS SUCH AS LOBBY, STAIRCASE, TERRACE, ETC ARE NOT INCLUDED WHILE MEASURING BUILT UP AREA OF A RESIDEN TIAL UNIT. THE SUPER BUILT UP AREA IS INCLUSIVE OF BUILT UP AREA AND OTHER COMMON FACILIT IES SHARED WITH OTHER RESIDENTIAL UNITS. HE ARGUED THAT THE TERRACE IS OUTSIDE THE IN NER MEASUREMENT AND IT CANNOT BE TAKEN IN THE CALCULATION OF BUILT UP AREA. THE INN ER MEASUREMENT OF A RESIDENTIAL UNIT SHOULD ONLY BE TAKEN FOR CALCULATION OF BUILT UP AR EA. 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 FACT. FOR THE SAKE OF CONVENIEN CE, THE RELEVANT PORTION OF NATIONAL BUILDING CODE OF INDIA IS REPRODUCED HEREIN BELOW:- 2.65 PLINTH AREA-THE BUILT UP COVERED AREA MEASUR ED AT THE FLOOR LEVEL OF THE BASEMENT OR ANY STOREY. 2.26 COVERED AREA- GROUND AREA COVERED BY BUILDING IMMEDIATELY ABOVE THE PLINTH LEVEL. THE AREA COVER ED BY THE FOLLOWING IN THE OPEN SPACES IS EXCLUDED FROM COVE RED AREA. A) GARDEN, ROCKERY, WELL AND WELL STRUCTURES, PLANT NURSERY, WATERPOOL, SWIMMING POOL (IF UNCOVERED), PLATFORM R OUND A TREE, TANK, FOUNTAIN, BENCH, CHABUTRA WITH OPEN TOP AND U NENCLOSED ON SIDES BY WALLS AND THE LIKE; B) DRAINAGE CULVERT, CONDUIT, CATCH-PIT, GULLY PIT, CHAMBER, GUTTER AND THE LIKE; C) COMPOUND WALL, GATE, UNSTOREYED PORCH AND PORTIC O, CANOPY, SLIDE, SWING, UNCOVERED STAIRCASE, RAMPS AR EAS COVERED BY CHHAJJA AND THE LIKE; AND D) WATCHMENS BOOTH, PLUMPHOUSE, GARBAGE SHAFT, ELE CTRIC CABIN OR SUB-STATIONS, AND SUCH OTHER UTILITY STRUC TURES MEANT FOR THE SERVICES OF THE BUILDING UNDER CONSIDERATION. NOTE- FOR THE PURPOSE OF THIS PART, COVERED AREA EQ UALS THE PLOT AREA MINUS THE AREA DUE FOR OPEN SPACES. 4.2.1. WE FIND THAT THE LEARNED AO DURING THE COUR SE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE INTER ALIA TO SUBMIT BEFORE HIM THE COPIES OF BROCHURE ISSUED BY THE ASSESSEE TO THE PROSPECTIVE BUYERS FOR EFFECTIN G THE SALE OF RESIDENTIAL UNITS DURING THE ASST YEAR UNDER APPEAL. THE ASSESSEE DU LY MADE AVAILABLE THE COPIES OF THE BROCHURE ISSUED IN ORDER TO ATTRACT PROSPECTIVE BUYERS AND ALSO COPIES OF ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 10 ORIGINAL SALE DEEDS BEFORE THE LEARNED AO WHICH WER E DULY RETURNED BY THE LEARNED AO AFTER VERIFICATION. WE FIND THAT THE L EARNED AO CALCULATED THE SUPER BUILT UP AREA OF EACH BUILDING BASED ON THE BROCHUR ES BY INCLUDING THE AREA OF OPEN TERRACE AND THEREFROM ESTIMATED THE BUILT UP AREA B Y TAKING 90% OF THE SUPER BUILT UP AREA OF EACH BUILDING AS BUILT UP AREA. WE FIND THAT THE LEARNED AO BRUSHED ASIDE THE ARGUMENT OF THE ASSESSEE THAT THE BROCHUR ES ARE ONLY INDICATIVE IN NATURE AND THE ACTUALS MAY VARY FROM WHAT IS STATED IN THE BROCHURES. THE ASSESSEE ALSO TRIED TO EXPLAIN THAT AS PER THE SALE DEED WHICH WA S REGISTERED WITH REGISTRAR FOR STAMP DUTY PURPOSES, THE TOTAL BUILT UP AREA OF EAC H BUILDING WAS BELOW THE MAXIMUM AREA SPECIFIED IN SECTION 80IB(10) OF THE A CT. THE LEARNED AO SIMPLY IGNORED THE SALE DEEDS THAT WERE PRODUCED BEFORE HI M AND PLACED RELIANCE ON THE BROCHURES ISSUED BY THE ASSESSEE TO ATTRACT PROSPEC TIVE 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 MAXIM UM AREA SPECIFIED IN THE ACT AND THERE IS NO SCOPE FOR MAKING THE ASSUMPTIONS AN D 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 (MU M) 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 RAT IO 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 ALTERNATIV E 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 I TALIAN AND SPELLED AS TERRAZA IN SPANISH. THIS IS AN OUTDOOR EXTENSION THAT CAN BE OCCUPIED BY LOTS OF PEOPLE AND IS BEYOND GROUND LEVEL. A TERRACE HAS MORE SPACE AND W ITH AN OPEN-TOP. WE FIND THAT THE DEFINITION OF BUILT UP AREA MEANS INNER MEASURE MENT OF THE RESIDENTIAL UNIT AT THE ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 11 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. HENCE IT COULD BE CONCLUDED THAT THE OPEN TERRACE I S NOT COVERED WITHIN THE MEANING OF BUILT UP AREA AS IT IS OPEN TO SKY AND WOULD NOT BE PART OF THE INNER MEASUREMENT OF THE RESIDENTIAL FLOOR AT ANY FLOOR LEVEL. RELIANCE IN THIS REGARD IS MADE ON THE DECISION OF THE CO-ORDINATE BENCH OF AHMEDABAD TRIBUNAL IN THE CASE OF AMALTAS ASSOCIATE S VS ITO REPORTED IN 131 ITD 142 (AHD.) WHEREIN IT WAS HELD THAT THE DEFINITION OF BUILT UP AREA IS INCLUSIVE OF BALCONY BUT NOT OPEN TERRAC E. IT FURTHER HELD THAT DVO HAS CONSIDERED THE OPEN TERRACE AS ANALOGOUS TO BALCONY / VERANDAH WITHOUT ANY BASIS. THEREFORE, IT TOOK THE VIEW THAT THE AUTHORITIES BE LOW WERE NOT JUSTIFIED IN TAKING THE OPEN TERRACE AS BALCONY / VERANDAH REJECTING THE CL AIM OF THE ASSESSEE. 4.2.4. RELIANCE IN THIS REGARD IS PLACED ON THE D ECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS M/S MAHALAKSHMI HOUSING IN TAX CASE (APPEAL) NOS. 583 & 584 OF 2011 AND 316 & 317 OF 2012 DATED 2.11. 2012 , WHEREIN THE QUESTIONS RAISED BEFORE THEIR LORDSHIPS AND THE DECISION REND ERED THEREON ARE AS UNDER:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLATE TRIBUNAL IS RIGHT IN LAW IN HOLDING THAT THE PRIVATE TERRACE AREA SHOULD BE INCLUDED IN THE BUILT UP AREA OF THE FLATS FOR THE PURPOSE OF M AKING OUT STATUTORY EXTENT OF BUILT UP AREA AS PER CLAUSE (A) OF SECTION 80IB( 14) OF THE INCOME TAX ACT ? HELD: 5. IT IS SEEN FROM THE FACTS NARRATED HEREIN THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION. THE ASSESSEE ENTERED INTO AN AGREEMENT OF SALE WITH ONE ASHOK KUMAR FOR JOINT DEVELOPMENT OF THE PROPERTY. THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER SECTION 80IB(1 0) OF THE INCOME TAX ACT IS REJECTED ON THE GROUND THAT THE ASSESSEE WAS NOT THE OWNER OF THE LAND. AGGRIEVED BY THE SAME, THE ASSESSEE WENT ON A PPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), WHO DISMISSED THE APPEAL. AGGRIEVED BY THE SAME, THE ASSESSEE WENT ON FURTHER APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. 6. THE TRIBUNAL CONS IDERED THE ASSESSEE'S ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 12 APPEAL ALONG WITH TWO OTHER ASSESSEES' APPEALS INVO LVING 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 O F INCOME 'TAX. 8Y JUDGMENT DATED 19.10.2012, THIS COURT ALLOWED THE A SSESSEE'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 DEDU CTION UNDER SECTION 80- IB(10) OF THE ACT AND THAT THE ASSESSEE WOULD BE EN TITLED 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 RE VENUE 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 ARIS E. IN THE CIRCUMSTANCES, WE FIND NO JUSTIFIABLE GROUND TO ACCEPT THE PLEA OF THE REVENUE ON THIS ASPECT. 8. AS FAR AS THE REVENUES CONTENTION THAT FOR THE PURPOSE OF SECTION 80- IB(10} DEDUCTION, THE ASSESSEE SHOULD HAVE OWNED T HE PROPERTY IS CONCERNED, THE SAME IS LIABLE TO BE REJECTED BY REA SON OF OUR DECISION RENDERED IN T.C.NOS. 581, 1186 OF 2008 AND 136 OF 2 009 - CEEBROS HOTELS PVT LTD V. DEPUTY COMMISSIONER OF INCOME TA X DATED 19,10.2012. HENCE, THE APPEALS FILED BY THE R EVENUE VIZ., T.C. (A). NOS. 583 AND 584 OF 2011 STANDS DISMISSED AND THIS PORTION OF THE TRIBUNAL'S ORDER STANDS CONFIRMED. THE ASSESSEE'S A PPEALS IN T.C.NOS.316 AND 317 OF 2012 STAND ALLOWED, HOLDING THAT THE TER RACE AREA . NO COSTS. 4.2.5. RELIANCE IS ALSO PLACED ON THE DECISION OF THE CO-ORDINATE BENCH DECISION OF PUNE TRIBUNAL IN THE CASE OF SHRI NARESH T. WADHWAN I VS DCIT IN ITA NO.S 18, 19 & 20 /PN/2013 FOR ASST YEARS 2007-08,2008-09 & 2009 -10 DATED 28.10.2014, WHEREIN IT WAS HELD THAT :- 18. A BARE PERUSAL OF THE AFORESAID QUESTION OF L AW BEFORE THE HON'BLE MADRAS HIGH COURT WOULD REVEAL THAT THE ISSUE RELAT ED TO WHETHER OPEN SPACE OF THE TERRACE WOULD FALL WITHIN THE EXPRESSI ON 'BUILT-UP AREA'. THE FACTS BEFORE THE HON'BLE HIGH COURT WERE THAT ASSES SEE HAD CONSTRUCTED VARIOUS APARTMENT BLOCKS AND EACH BLOCK HAD 64 APAR TMENTS. THE APARTMENTS LOCATED AT FIRST TO SIXTH FLOOR WERE OF AREAS LESS THAN 1500 SQ.FT.. HOWEVER, THE FLATS LOCATED ON THE 7 TH FLOOR HAD THE ADVANTAGE OF EXCLUSIVE OPEN TERRACE. WHILE CONSIDERING THE RELIE F U/S 801B(10) OF THE ACT, THE ASSESSING OFFICER TOOK INTO CONSIDERATION THE AREA OF SUCH ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 13 EXCLUSIVE/PRIVATE OPEN TERRACE AS A PART OF THE BUI LT-UP AREA OF THE UNITS LOCATED AT THE 7 TH FLOOR. AFTER CONSIDERING THE ABOVE ASPECT, THE BU ILT- UP AREA OF THE FLATS LOCATED AT THE 7 TH FLOOR EXCEEDED 1500 SQ.FT. AND HENCE THE ASSESSING OFFICER HELD THAT THE CONDITION PRESCRIBED IN CLAUSE (C) OF SECTION 8018(10) OF THE ACT WAS NOT FULFILLE D. THE SAID POSITION TAKEN BY THE ASSESSING OFFICER WAS UPHELD RIGHT UP TO THE TRIBUNAL. HOWEVER, THE HON'BLE HIGH COURT DISAGREED WITH THE STAND OF THE REVENUE AND HELD THAT SUCH OPEN TERRACE WOULD NOT BE INCLUDIBLE IN THE CALCULATION OF 'BUIL T-UP AREA' FOR THE PURPOSE OF EXAMINING THE CONDITION PRESCRIBED IN C LAUSE (C) OF SECTION 8018(10) OF THE ACT. IN THIS VIEW OF THE MATTER, TH E AFORESAID JUDGEMENT OF THE HON'BLE MADRAS HIGH COURT AND WHICH HAS BEEN FURTHER AFFIRMED IN A SUBSEQUENT DECISION IN THE CASE OF SANGHVI AND DOSHI ENTERPRISE (SUPRA), COVERS THE ISSUE BEFORE US. 19. HOWEVER, IN THE COURSE OF HEARING, THE LEARNED CIT -OR ATTEMPTED TO DISTINGUISH THE JUDGEMENT OF THE HON'BLE HIGH CO URT BY POINTING OUT THAT THE SAME RELATED TO ASSESSMENT YEAR 2003-04, A PERIOD DURING WHICH THE DEFINITION OF 'BUILT-UP AREA' CONTAINED I N 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 COU RT WAS APPROVED BY THE CONCERNED LOCAL AUTHORITY PRIOR TO 01.04.200 5 I.E. PRIOR TO THE DATE WHEN THE DEFINITION OF 'BUILT-UP AREA' WAS BRO UGHT 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 CO URT WAS CONSIDERING A PROJECT APPROVED PRIOR TO 01.04.2005 YET IT HAS TAKEN INTO CONSIDERATION THE DEFINITION OF 'BUILT-UP AREA' CON TAINED IN SECTION 801B(14)(A) OF THE ACT, WHICH WAS INSERTED W.E.F. 0 1.04.2005. AS PER THE HON'BLE HIGH COURT EVEN AFTER ASSUMING THAT SUC H DEFINITION WAS TO BE RETROSPECTIVELY APPLIED YET THE AREA OF OPEN TER RACE WOULD NOT FALL WITHIN THE MEANING OF THE EXPRESSION 'BUILT-UP AREA '. THE HON'BLE HIGH COURT REFERRED TO THE INDIAN STANDARD METHOD OF MEA SUREMENT OF PLINTH, CARPET AND RENTABLE AREAS OF BUILDINGS AS I SSUED OF BUREAU OF INDIAN STANDARDS AND ALSO THE MEANING OF THE AFORES AID EXPRESSION ASSIGNED AS PER THE RULES AND REGULATIONS OF THE LO CAL AUTHORITY AND CONCLUDED THAT AN OPEN TERRACE COULD NOT BE EQUATED TO A 'PROJECTION' OR 'BALCONY' REFERRED TO IN SECTION 80IB(14)(A) OF THE ACT. 21. NOTABLY, THE HON'BLE HIGH COURT ALSO CONSIDERE D AN ARGUMENT FROM THE SIDE OF THE REVENUE TO THE EFFECT THAT THE SALE OF THE AREA OF OPEN TERRACE BY THE ASSESSEE TO THE RESPECTIVE PURC HASER WOULD JUSTIFY THE INCLUSION OF SUCH TERRACE AREA INTO THE CALCULA TION OF 'BUILT-UP AREA'. BEFORE US ALSO, THE LEARNED CIT-DR HAS RAISED THE S AID ISSUE THOUGH SHE HAS FAIRLY CONCEDED THAT SUCH A FINDING WAS NOT EME RGING FROM THE ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 14 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 ARE A, NOT BEING A PROJECTION AND HENCE, NOT INCLUDED IN THE PLINTH AR EA, THE QUESTION HEREIN IS AS TO WHETHER THE TRIBUNAL IS JUSTIFIED I N CONFIRMING THE ORDER OF ASSESSMENT TO INCLUDE THE TERRACE AREA INT O THE BUILT-UP AREA SOLELY BY REASON OF THE FACT THAT THE ASSESSEE HAD SOLD IT TO PURCHASERS OF THE 7 TH FLOOR AS A PRIVATE TERRACE. 30. WE DO NOT THINK, THE TRIBUNAL IS JUSTIFIED IN T AKING THE VIEW THAT OPEN TERRACE WOULD FORM PART OF THE BUILT-UP AREA F OR THE PURPOSE OF SUB-CLAUSE (C) OF SECTION 80-IB(10). AS ALREADY SEE N IN THE PRECEDING PARAGRAPHS, AN ASSESSEE HAVING AN APPROVED PLAN PRO JECT ALONE HAS THE RIGHT TO CLAIM DEDUCTION UNDER SECTION 80-IB. A NY PROJECT UNDERTAKEN NOT APPROVED BY THE LOCAL AUTHORITY IS O UTSIDE THE PURVIEW OF THE ACT. THUS, WHEN A LOCAL AUTHORITY, E NDOWED WITH THE JURISDICTION TO GRANT THE APPROVAL IS GUIDED IN ITS APPROVAL BY REGULATION AS TO WHAT CONSTITUTES THE PLINTH AREA, WHICH IS THE BUILT- UP AREA, IT IS DIFFICULT FOR US TO AGREE WITH THE C ONTENTION OF THE REVENUE AS WELL AS THE REASONING OF THE TRIBUNAL TH AT FOR THE PURPOSE OF CONSIDERING THE CLAIM UNDER SECTION 80-I B, THE BUILT-UP AREA WOULD BE DIFFERENT FROM WHAT HAS BEEN GIVEN AP PROVAL BY THE LOCAL AUTHORITY, ON A BUILDING PROJECT. GIVEN THE F ACT THAT DURING 2003-04 THERE WAS NO DEFINITION AT ALL ON WHAT A BU ILT-UP AREA IS, THE UNDERSTANDING OF THE REVENUE, WHICH IS EVIDENTLY CO NTRARY TO THE APPROVAL OF THE LOCAL AUTHORITY BASED ON THE RULES AND REGULATIONS COULD NOT BE SUSTAINED. CONSEQUENTLY, WE HAVE NO HE SITATION IN AGREEING WITH THE ASSESSEE'S CONTENTION THAT OPEN T ERRACE AREA, EVEN IF BE PRIVATE TERRACE CANNOT FORM PART OF THE BUILT -UP AREA 22. AS PER THE HON'BLE HIGH COURT, TERRACE AREA WOU LD NOT FORM PART OF THE BUILT-UP AREA BY THE REASON OF THE FACT THAT AS SESSEE SOLD IT TO THE PURCHASER AS A PRIVATE TERRACE. AT THIS STAGE, WE M AY 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 A CT. THUS, THE ARGUMENT OF THE LEARNED CIT-OR IS HEREBY REJECTED. 23. IN VIEW OF THE AFORESAID JUDGEMENT OF THE HON'B LE MADRAS HIGH COURT, WE ARE UNABLE TO UPHOLD THE STAND OF THE ASS ESSING 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 RESIDE NTIAL UNIT AND THERE ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 15 BEING NO ROOM UNDER SUCH TERRACE, EVEN IF THE SAME IS AVAILABLE EXCLUSIVELY FOR USE OF THE RESPECTIVE UNIT- HOLDERS . 4.2.6. IN VIEW OF THE AFORESAID JUDICIAL PRECEDEN TS, THE TERRACE AREA NEEDS TO BE EXCLUDED FROM THE BUILT UP AREA AND IF THE SAME IS EXCLUDED , THEN THE RESULTANT BUILT UP AREA IS WELL WITHIN THE 1500 SQ.FT LIMIT PRESCRIBED IN THE STATUTE AND HENCE REJECTION OF DEDUCTION U/S 80IB(10) OF THE ACT ON THIS GROUND BY THE LEARNED AO IS NOT IN ORDER. 4.3. COMMERCIAL AREA IN THE PROJECT IS MORE THAN 3 % THE LEARNED AR ARGUED THAT AS PER THE SANCTIONED PL AN, THE TOTAL AREA IS SANCTIONED BY THE LOCAL AUTHORITY IS 69.12 BIGHAS. OUT OF THIS , THE ASSESSEE HEREIN HAS ONLY 58 BIGHAS OF LAND FOR CONSTRUCTION AND FOR THE BALANCE 11.12 BIGHAS OF LAND, M/S MIRAS PROPERTIES PVT LTD HAS ENTERED INTO A SEPARATE PARTNERSHIP AGR EEMENT WITH ANOTHER FIRM. HE ARGUED THAT IN ASSESSEES PROJECT LAND OF 58 BIGHAS , THERE ARE NO COMMERCIAL ESTABLISHMENTS AS CAN BE SEEN IN THE DEMARCATED PLA N ATTACHED WITH THE AGREEMENT. 4.3.1. WE FIND FROM THE PARTNERSHIP DEED DATED 27.2.2007 ENTERED INTO BETWEEN MIRAS PROPERTIES PVT LTD, NARAYAN LADHA, SURESH KE WLANI , SUNIL TALWAR , HARISH TALWAR AND ASHIANA HOUSING AND FINANCE INDIA LIMITE D , THE FOLLOWING EXPRESSIONS ASSUME GREATER SIGNIFICANCE :- THE FIRM MEANS THE PARTNERSHIP FIRM HEREBY FORMED BY THE PARTIES HERETO AND NAMED AS ASHIANA AMAR DEVELOPERS. THE PROJECT MEANS THE RESIDENTIAL COLONY TO BE DE VELOPED AND MARKETED ON THE PROJECT LAND AND MORE FULLY DESCRIBED IN ART ICLE 5.0 HEREUNDER. ARTICLE 5.0 PROJECT 5.1. THE PROJECT OF THE FIRM SHALL BE TO DESIGN, D EVELOP AND CONSTRUCT A RESIDENTIAL HOUSING COLONY ON THE PROJECT LAND CONS ISTING OF SEVERAL RESIDENTIAL UNITS SO THAT THE RESIDENTIAL STATUS OF THE PROJECT IS MAINTAINED ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 16 AND THE FIRM GETS EXEMPTION UNDER SECTION 80IB OF T HE INCOME TAX ACT, 1961. 4.3.2. WE FIND FROM THE PARTNERSHIP DEED DATED 27.2.2007 ENTERED INTO BETWEEN MIRAS PROPERTIES PVT LTD, NARAYAN LADHA, SURESH KE WLANI (COLLECTIVELY CALLED MIRAS PARTNERS) AND ASHIANA HOUSING AND FINANCE INDIA LIM ITED , THE FOLLOWING EXPRESSIONS ASSUME GREATER SIGNIFICANCE :- THE FIRM MEANS THE PARTNERSHIP FIRM HEREBY FORMED BY THE PARTIES HERETO AND NAMED AS ASHIANA AMAR INFRASTRUCTURE. THE PROJECT MEANS THE COMMERCIAL AND RESIDENTIAL COLONY TO BE DEVELOPED 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 LA ND 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 DE ED THAT MIRAS PARTNERS HAVE FORMULATED A PLAN AND PROJECT FOR DEVELOPMENT OF TH E 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 CONSTRUCT ION OF WHOLLY COMMERCIAL AND RESIDENTIAL COLONY ON THE EASTERN PORTION OF THE LA ND 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 PROP ERTIES 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 WE RE SOLD TO OTHER PARTIES BY THE LAND OWNER. WE FIND THAT THE ASHINA AMAR INFRAST RUCTURE HAD CARRIED OUT THE COMMERCIAL PROJECT WHICH IS AN INDEPENDENT LEGAL EN TITY FOR INCOME TAX PURPOSES. WE ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 17 ALSO FIND FROM THE LEARNED CITA ORDER THAT THE ASSE SSEE HAD DULY MADE AVAILABLE THE COPIES OF THE BROCHURES ISSUED BY IT IN ORDER TO AT TRACT PROSPECTIVE BUYERS. AS PER THE SUBMISSION OF THE LEARNED AR, IT IS CLEARLY DISCERN IBLE THAT BOTH PROPERTIES WERE INDEPENDENT UNITS AND BELONGING TO TWO SEPARATE ENT ITIES. THESE FACTS STATED WERE NOT CONTROVERTED BY THE REVENUE BEFORE US. WE ONLY FIN D THAT THE LEARNED CITA HAVING BROUGHT THE RELEVANT FACTS ON RECORD AND AGREEING W ITH THE ASSESSEE HAD FINALLY ENDORSED THE VIEWS OF THE LEARNED AO WITHOUT ASSIGN ING ANY INDEPENDENT REASONING FOR HIS DECISION. 4.3.3. WE PLACE RELIANCE ON THE CO-ORDINATE BENCH DECISION OF BANGALORE TRIBUNAL IN THE CASE OF DCIT VS BRIGADE ENTERPRISES (P) LTD REP ORTED IN 119 TTJ 269 (BANG) , WHEREIN IT WAS HELD THAT IF THE PLAN FOR RESIDENTIA L UNITS HAS BEEN APPROVED SEPARATELY THEN THE DEDUCTION SHOULD BE ALLOWED ON EACH RESIDE NTIAL UNITS SEPARATELY. 4.3.4. WE ALSO FIND THAT THE CASE LAW RELIED UPON BY THE LEARNED DR ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS RAGHAVENDRA CONSTRUCTIONS REPORTED IN (2013) 354 ITR 194 (KARN) IS ACTUALLY IN FAVOUR OF THE ASSESSEE WHEREIN IT WAS HELD THAT : IN CALCULATING THE BUILT UP AREA IT IS ONLY THE INN ER MEASUREMENTS OF THE RESIDENTIAL UNIT ON THE FLOOR LEVEL, WHICH HAS TO B E TAKEN INTO CONSIDERATION. IF THERE ARE ANY PROJECTIONS AND BALCONIES AND IF I T EXCLUSIVELY BELONGS TO THE RESIDENTIAL UNTIS, THEN, THAT ALSO HAS TO BE TA KEN INTO CONSIDERATION FOR DECIDING THE BUILT UP AREA. HOWEVER, IF THE RESIDE NTIAL UNTI IS PROVIDED THE FACILITY OF COMMON AREA SHARED WITH OTHER RESIDENTI AL UNITS SUCH COMMON AREA HAVE TO BE EXCLUDED WHILE COMPUTING THE BUILT UP AREA. THE LANGUAGE EMPLOYED IN DEFINING BUILT UP AREA AS THE COMMON AR EA SHARED WITH OTHER RESIDENTIAL UNIT, IT DOES NOT MEAN THAT EVERY COMMO N AREA SHOULD BE SHARED WITH OTHER RESIDENTIAL UNITS. IF THAT AREA DOES NO T EXCLUSIVELY BELONG TO THE OWNER OF RESIDENTIAL UNIT AND IF HE HAS TO SHARE TH AT COMMON AREA WITH THE OWNER OF ANOTHER RESIDENTIAL UNIT, THEN THAT COMMON AREA HAS TO BE EXCLUDED FROM THE BUILT UP AREA. IF THIS PRINCIPLE IS KEPT IN MIND AND APPLIED TO THE FACTS OF THIS CASE, IN RESPECT OF 16 FLATS, THE COMMON AREA IS SHARED BY THESE 16 OWNERS OF RESIDENTIAL UNITS. IN RESPECT OF A-1 AND A-2 THE COMMON AREA IS SHARED BY THE OWNERS OF FLATS A- 1 AND A-2. THIS ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 18 COMMON AREA IS NOT THE SUBJECT MATTER OF SALE AS IS CLEAR FROM THE RECITALS IN THE SALE DEED. IN OTHER WORDS, THE OWNERS OF THE RESIDENTIAL UNITS DO NOT HAVE EXCLUSIVE RIGHT TO USE THESE BALCONIES AS THEY HAVE TO SHARE IT WITH OTHERS. IT IS IMMATERIAL WHETHER THEY HAVE TO SHAR E IT WITH OTHER 159 OWNERS OF THE RESIDENTIAL UNITS OR THEY HAVE TO SHA RE IT WITH THE ADJOINING OWNER OF THE RESIDENTIAL UNIT, THAT AREA CANNOT BE TAKEN INTO CONSIDERATION TO DECIDE THE BUILT UP AREA. FROM THE FACTS IT IS CLEAR THAT IF THIS BALCONY SPACE IS EXCLUDED ALL THE 160 UNITS ARE LESS THAN 1 500 SQ.FT AND THEREFORE THE ASSESSEE WAS ENTITLED TO 100% TAX EXEMPTION ON THIS PROJECT. WE ALSO FIND THAT THE AFORESAID DECISION OF KARNATA KA HIGH COURT DOES NOT TALK ABOUT TERRACE. FROM THE ABOVE , IT COULD BE SAFELY CONCL UDED THAT THE COMMERCIAL PROJECT WAS HANDLED BY AN INDEPENDENT PARTNERSHIP FIRM STYLED A S ASHIANA AMAR INFRASTRUCTURE FOR CONSTRUCTION OF COMMERCIAL COMPLEX ALONG WITH T HE APPROVED PLAN, AND BOTH RESIDENTIAL AND COMMERCIAL PROPERTIES BEING INDEPEN DENT UNTIS AND BELONG TO TWO INDEPENDENT ENTITIES. WE FIND THAT THE ASSESSEE F IRM HAD CONSIDERED 58 BIGHAS OF LAND FOR CONSTRUCTION OF RESIDENTIAL UNITS AND ADJACENT LAND OF 11 BIGHAS BELONGS TO ANOTHER FIRM WHICH CONSTRUCTED COMMERCIAL PROJECT SEPARATEL Y. HENCE THE DEDUCTION U/S 80IB(10) OF THE ACT SHOULD BE CLAIMED UNIT WISE AND HENCE REJECTION OF DEDUCTION U/S 80IB(10) OF THE ACT ON THIS GROUND BY THE LEARNED A O IS NOT IN ORDER. 5. IN VIEW OF THE AFORESAID FINDINGS AND JUDICIA L PRECEDENTS RELIED UPON, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IB(10) OF THE ACT AND ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 22 -01-2016 SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 22 -01/2016 ITA NO. 12/KOL/2014-B-AM M/S. ASHINA AMAR DEVELOPERS 19 . 1 THE APPELLANT: M/S. ASHINA AMAR DEVELOPERS 5F, E VEREST, 46/C CHOWRINGHEE ROAD, KOL-71. 2 THE RESPONDENT: INCOME TAX OFFICER, WARD 33(1), 3 R D FLOOR, 10B MIDDLETON ROW, KOL-71. P-7 CHOWRINGHEE SQ. KOL-69. 3 / THE CIT, 4.THE CIT(A) 5 . DR, KOLKATA BENCH 6 . GUARD FILE . TRUE COPY, BY ORDER, ASSTT REGISTRAR **PRADIP SPS COPY OF THE ORDER FORWARDED TO:-