DCIT, Circle-7, Kolkata, Kolkata V. M/S. South City Projects (Kolkata) Ltd., Kolkata

ITA 1677/KOL/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2375 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 14-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHARY
• Assessee Lawyers: S K AGARWAL
• Keywords: Business income; Question of law; Valuation report; Competent authority
• Section: 80IB; 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENCH KOLKATA BEFORE SHRI A.T.VARKEY, JM & SHRI M.BALAGANESH, AM ITA NO.1543/KOL/2014 & 1544/KOL/2014 ( ASSESSMENT YEAR :2009-10 & 2010-11 ) M/S. SOUTH CITY PROJECTS (KOLKATA) LTD., 375, PRINE ANWAR SHAH ROAD KOLKATA 700 068 VS. A.C.I.T / RANGE /KOLKATA AAYKAR BHAWAN, P-7 CHOWRINGHEE SQUARE KOLKATA 700 069 PAN/GIR NO.AAACD8933A (APPELLANT ) .. (RESPONDENT ) ITA NO.1676/KOL/2014 & 1677/KOL/2014 ( ASSESSMENT YEAR :2009-10 & 2010-11 ) D.C.I.T / RANGE /KOLKATA P-7,CHOWRINGHEE SQUARE 5 TH FLOOR, ROOM NO.15 KOLKATA 700 069 VS. M/S. SOUTH CITY PROJECTS (KOLKATA) LTD., 375, PRINE ANWAR SHAH ROAD KOLKATA 700 068 PAN/GIR NO.AAACD8933A (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY SHRI S.K. AGARWAL REVENUE BY SHRI ROBIN CHOUDHARY DATE OF HEARING 26/03/2019 DATE OF PRONOUNCEMENT 21/06/2019 / O R D E R PER BENCH : THESE CROSS APPEALS IN ITA NOS.1543/KOL/2014, 1544/KOL/2014, 1676/KOL/2014 & 1677/KOL/2014 FOR A.Y.2009-10 & 2010-11 ARISE OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-VIII, KOLKATA IN APPEAL NO.306/CIT(A)-VIII/KOL/22-12 DATED 28/05/2014 (LD. CIT(A) IN ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 2 SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3)OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 30/12/2011 BY THE LD. ADDL. COMMISSIONER OF INCOME TAX, RANGE-7, KOLKATA (HEREINAFTER REFERRED TO AS LD. AO). ITA NO.1676/KOL/2014 (A.Y.2009-10) 2. LET US TAKE UP REVENUE APPEAL FOR THE A.Y.2009-10 IN ITA NO.1676/KOL/2014. FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ACTION OF LD. AO DENYING DEDUCTION U/S.80IB(10) OF THE ACT IN RESPECT OF PROFIT FROM SALE OF CAR PARKING SPACE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE COMPANY HAS UNDERTAKEN VARIOUS REAL ESTATE/ HOUSING DEVELOPMENT PROJECTS. DURING THE YEAR, THE ASSESSEE COMPANY HAS SHOWN PROFIT DERIVED FROM HOUSING PROJECT AT 375, PRINCE ANWAR SHAH ROAD, KOLKATA 700068 WHICH INCLUDE PROFIT FROM SALE OF RESIDENTIAL UNITS AND SALE AND RENT FROM THE COMMERCIAL PROPERTIES. THE ASSESSEE CLAIMED DEDUCTION U/S.80IB(10) IN RESPECT OF PROFITS DERIVED FROM SALE OF RESIDENTIAL UNITS AND OTHERS IN THE SUM OF RS.197,59,59,835 FOR THE A.Y.2009-10 WHICH IS ALSO SUPPORTED BY AUDIT REPORT IN FORM 10CCB FURNISHED ALONG WITH RETURN OF INCOME. THERE IS NO DISPUTE AS TO THE ELIGIBILITY OF DEDUCTION U/S.80IB(10) OF THE ACT FOR THE ASSESSEE IN RESPECT OF THE AFORESAID HOUSING PROJECT. (I) DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE APPELLANT HAD SUBMITTED THAT CAR PARKING IS PART OF THE HOUSING PROJECT : AND CANNOT BE SEPARATED FROM THE HOUSING PROJECT FOR ALLOWING DEDUCTION U/S 80IB(10). HOWEVER, THE LD. AO HAS DISALLOWED SALE OF CAR PARKING AREA AND CONSIDERED IT INELIGIBLE FOR DEDUCTION U/S 80IB(10) ON THE BASIS OF FOLLOWING: THE PARKING SPACE CANNOT BE ANIINTEGRAL PART OF A HOUSING PROJECT. EVEN IF IT IS AN INTEGRAL PART OF THE HOUSING PROJECT, IT CANNOT BE AN INTEGRAL PART OF THE RESIDENTIAL UNIT. FURTHER, IN CONCLUSION, 'IT CANNOT BE A PART OF THE DEDUCTION U/S ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 3 80IB (10) OF INCOME TAX ACT 1961, WHICH IS AVAILABLE FOR A HOUSING PROJECT, THE RESIDENTIAL UNIT OF 'WHICH CAN'T EXCEED MAXIMUM BUILT UP AREA OF ONE THOUSAND AND FIVE HUNDRED SQUARE FEET IN KOLKATA.. IT CANNOT BE IGNORED THAT THE 'LOCUS' OF DEDUCTION U/S 80IB(10) OF\THE INCOME TAX ACT 1961 IS THE RESIDENTIAL UNIT AND IS SUBJECT TO FULFILLMENT OF CONDITIONS U/S 80IB(I0). 'IN A RECENT JUDGMENT THE APEX COURT HAS HELD THAT SALE OF STILT PARKING AREA BY THE BUILDERS AND PROMOTERS ARE ILLEGAL IN THE STATE OF MAHARASHTRA, .THEREFORE IF SUCH SALE IS NOT PERMITTED BY LAW, THEN ON WHAT GROUNDS IT CAN BE CLAIMED THAT PROFITS FROM SUCH SALES ARE DEDUCTIBLE. THEREFORE PROFIT FROM SALE OF CAR PARKING AREA IS HELD NOT TO BE ELIGIBLE FOR DEDUCTION U/S 80IB(10) 3.1. THE ASSESSEE PLEADED THAT THE CAR PARKING HAS BEEN ALLOTTED ONLY TO THOSE PERSONS WHO HAVE PURCHASED RESIDENTIAL UNIT IN THE PROJECT AND THIS IS A PART AND PARCEL OF THE HOUSING PROJECT ITSELF. IT WAS PLEADED THAT THE FACILITY OF CAR PARKING ACCOMPANYING RESIDENTIAL UNITS HAD BEEN DESIGNED TO MEET THE NEED OF THE PURCHASERS OF RESIDENTIAL UNITS, WHO WOULD NOT HAVE PURCHASED THE RESIDENTIAL FLAT IN THE ABSENCE OF THIS CAR PARKING FACILITY. ACCORDINGLY, IT WAS PLEADED BY THE ASSESSEE THAT THE PROFIT DERIVED FROM SALE OF CAR PARKING AREA WAS ALSO ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT AS IT WAS DERIVED FROM THE VERY SAME HOUSING PROJECT AND CANNOT BE EXCLUDED FROM THE PROJECT. IT WAS ALSO PLEADED THAT DEDUCTION U/S.80IB(10) OF THE ACT IS IN RESPECT OF PROFITS FROM HOUSING PROJECT AND NOT RESIDENTIAL UNITS AS HAS BEEN CONSIDERED AS THE ONLY POINT BY THE LD. AO FOR DENYING DEDUCTION U/S.80IB (10) OF THE ACT IN RESPECT OF CAR PARKING FACILITY. A HOUSING PROJECT IS TO BE UNDERSTOOD AS ONE CONSISTING OF RESIDENTIAL UNITS ALONGWITH OTHER AMENITIES SUCH AS CAR PARKING, UTILITY ROOMS ETC., THE ASSESSEE BEFORE THE LD. CIT(A) ALSO DISTINGUISHED THE DECISION OF THE HONBLE APEX COURT RELIED UPON BY THE LD. AO WHEREIN IT WAS HELD THAT SALE OF STILT PARKING AREA BY THE BUILDERS AND PROMOTERS ARE ILLEGAL IN THE STATE OF MAHARASHTRA AND THEREFORE, IF SUCH SALE IS NOT PERMITTED BY LAW, THEN ON WHAT GROUNDS IT COULD BE CLAIMED THAT PROFITS FROM SUCH SALES ARE DEDUCTIBLE. THE ASSESSEE WITH REGARD TO THIS DECISION ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 4 RELIED UPON BY THE LD. AO STATED BEFORE THE LD. CIT(A) THAT THE SAID DECISION IS NOT RELEVANT TO THE INSTANT CASE FOR THE FOLLOWING REASONS:- I. THE DECISION IS IN RESPECT OF SALE OF STILT CAR PARKING IN MAHARASHTRA AND IS THEREFORE IN RELEVANCE TO THE RULES AND REGULATIONS' 'PREVAILING IN MAHARASHTRA WHICH IS SUBSTANTIALLY DIFFERENT FROM THAT OF WEST BENGAL, KOLKATA II. FURTHER THE APEX COURT HAS HELD SALE OF CAR PARKING AREA ILLEGAL ON THE GROUND THAT IT IS A COMMON AREA FOR THE FLAT OWNERS AND THEREFORE IS A PART AND PARCEL OF THE HOUSING PROJECT AND SHOULD NOT BE SOLD SEPARATELY AS PER RULES OF STATE OF MAHARASHTRA.' III. THUS EVEN THE JUDGMENT REFERRED BY THE LEARNED AO CONTEMPLATES CAR PARKING AREA AS AN INTEGRAL PART OF THE HOUSING PROJECT, WHICH IS THE VERY BASIS OF CLAIM OF DEDUCTION OF SALE FROM CAR PARKING AREA U/S 80IB(10) 3.2. ACCORDINGLY, IT WAS ARGUED THAT ASSESSEE IS ENTITLED FOR DEDUCTION IN RESPECT OF PROFITS DERIVED FROM SALE OF CAR PARKING OR BY TREATING THE SAME AS PART AND PARCEL OF THE ENTIRE HOUSING PROJECT WHICH IS ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT. IT WAS SPECIFICALLY POINTED OUT THAT THERE WAS NO INDEPENDENT / SEPARATE SALE OF CAR PARKING SPACE ALONE WITHOUT THE RESIDENTIAL UNIT BEING SOLD. IN OTHER WORDS, THE CAR PARKING SPACE IS LINKED WITH THE CONCERNED RESIDENTIAL UNIT AND SOLD AS A PACKAGE TO THE BUYERS. THE ASSESSEE ALSO PLACED RELIANCE ON VARIOUS MUMBAI TRIBUNAL DECISIONS IN SUPPORT OF ITS CONTENTIONS. THE LD. CIT(A) BY PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PARAMOUNT PROJECTS LTD., IN ITA NO.4975 OF 2010 AND 4977 OF 2010 AND CERTAIN OTHER MUMBAI TRIBUNAL DECISIONS WHEREIN IT WAS HELD THAT PROFIT ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 5 DERIVED FROM SALE OF CAR PARKING SPACE IS AN INTEGRAL PART OF THE HOUSING PROJECT AND ACCORDINGLY ELIGIBLE FOR DEDUCTION U/S.80IB (10) OF THE ACT. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. AT THE OUTSET, WE FIND THAT THE LD. CIT(A) HAD PLACED RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT AND VARIOUS OTHER DECISIONS IN RESPECT OF IMPUGNED ISSUE IN DISPUTE BEFORE US. THE OBSERVATIONS OF THE LD. CIT(A) ARE REPRODUCED HEREUNDER:- 3.3 REFERENCE IS DRAWN TO THE DECISION TAKEN BY ITAT KOLKATA, IN THE CASE OF NORTH CITY DEVELOPERS VS. DEPARTMENT OF' INCOME TAX ITA NO.1307(KOL) OF 2010, M WHICH IT WAS HELD THAT, 'WORDS USED IN SECTION 80-IB(10) ARE UNDERTAKING, DEVELOPING AND BUILDING HOUSING PROJECTS AND ' AND NOT MERE CONSTRUCTION AND SALE OF HOUSING FLATS FORMING PART OF THE HOUSING PROJECTS. THE WORDS 'HOUSING, PROJECTS 'ARE MUCH WIDER THAN, HOUSING FLATS. THE APPELLANT IS THE DEVELOPER OF HOUSING PROJECT. THE ACTIVITIES OF UNDERTAKING, DEVELOPING, CONSTRUCTING AND BUILDING OF HOUSING PROJECTS INCLUDE NOT ONLY CONSTRUCTION OF FLATS BUT ALSO INCLUDES WITHIN ITS PURVIEW THE ACTIVITY OF CONSTRUCTION OF RESIDENTIAL FLATS, DEVELOPING SURROUNDING OPEN SPACE, COMMON AREA AND FACILITIES, PATH WAYS AND ALSO TO PROVIDE COMMUNITY HALL FOR SOCIAL GATHERINGS. IT ALSO DEPENDS WHETHER THERE IS ALSO THE FACILITY OF PROVIDING GYM, GARAGES AND PARKING SPACE, SWIMMING POOL, INTERCOM SYSTEM NOT ONLY THIS IN A HOUSING PROJECT DRINKING WATER SUPPLY, ELECTRIC INSTALLATION, COMMON AREA SERVICES AND FACILITIES ARE ALSO REQUIRED TO BE PROVIDED BY THE DEVELOPER. IT HAS BEEN HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IB IN RESPECT OF AMOUNT RECEIVED FROM CAR PARKING SPACE BY THE ITAT, MUMBAI IN DCIT , CENTRAL CIRCLE-2;VS PURVANKARA PROJECTS LTD. IN ITA NOS. 4347TO4351 FOR ASSESSMENT YEAR 2004-05 TO 2008-09. IT HAS. BEEN HELD BY THE HON'BLE BOMBAY HIGH COURT IN ITA NOS. : 4975/4976 AND 77 OF 2010 IN THE CASE OF PURVANKARA PROJECTS LTD. AS UNDER:- 'THE FINDING OF FACTS RECORDED BY THE CIT(A) AND APPROVED BY ITAT IS THAT, IN PRESENT CASE , IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB. THE ONLY DISPUTE IS WHETHER THE ASSESSEE IS ENTITLED ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 6 TO DEDUCTION IN RESPECT OF AMOUNT RECEIVED TOWARDS CAR PARKING SPACE. THE FINDING OF FACT RECORDED BY THE CIT(A) AND APPROVED BY ITAT IS THAT THE CAR PARKING SPACE FORMS PART AND PARCEL OF THE HOUSING PROJECT, WITHOUT WHICH EVEN APPROVAL FOR HOUSING PROJECT COULD NOT HAVE BEEN OBTAINED FROM COMPETENT AUTHORITY. THEREFORE, THE DECISION OF THE TRIBUNAL IN HOLDING THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB IN RESPECT OF HOUSING PROJECT INCLUSIVE OF THE AMOUNT RECEIVED ON ACCOUNT OF CAR PARKING CANNOT BE FAULTED. 3.5. REFERENCE IS ALSO DRAWN TO VARIOUS CASE LAWS REFERRED BY THE LD. AR OF THE APPELLANT IN HIS SUBMISSION, WHERE IT WAS HELD THAT CAR PARKING IS AN INTEGRAL PART OF HOUSING PROJECT WHICH IS ELIGIBLE FOR DEDUCTION U/S.80IB. IN THE CASE OF ACIT VS. M/S. VAMAN ESTATE ITA NO.7570/MUM/2011 (ORDER DATED 19.10.2012) THE HONBLE ITAT HAS HELD THAT DEDUCTION U/S.80IB(10) IS AVAILABLE ON INCOME FROM CAR PARKING SPACES. THE RELEVANT PARA OF THE ORDER OF THE TRIBUNAL IS QUOTED BELOW:- WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND MERIT IN THE PLEA OF THE LD. 'ASSESSEE THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEE 'S OWN CASE. THE TRIBUNAL IN ITA NO.3016/MUM/2008 FOR AY 2004-05 DATED 28.10.2009 HAS HELD VIDE PARA 12 OF THE ORDER AS UNDER:- 'AS REGARDS GROUND NO. OF THE REVENUE, RELATING TO THE INCOME FROM CAR PARKING SPACES, WE AGREE WITH THE FINDING OF THE CIT(A) THAT THEY ARE THE INTEGRAL PART OF THE .HOUSING PROJECT AND HENCE IT IS TO BE INCLUDED FOR DEDUCTION U/S 80IB (10)-OF THE ACT, IN THE RESULT GROUND NO.2 IS ALLOWED. THE ABOVE ORDER HAS BEEN FOLLOWED BY THE TRIBUNAL IN THE SUBSEQUENT ASSESSMENT YEARS I.E. 2005-06 AND 2006-07. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE. CONSISTENT VIEW OF THE TRIBUNAL, DECLINE TO INTERFERE-WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ACCOUNT AND ACCORDINGLY THE GROUND TAKEN BY THE REVENUE, IS REJECTED. RESPECTFULLY FOLLOWING THE DECISION TAKEN BY HONBLE BOMBAY HIGH COURT AND ITAT, MUMBAI I FIND NO MERIT IN THE ARGUMENT OF THE AO THAT' CAR PARKING IS NOT INTEGRAL PART OF HOUSING PROJECT. FURTHER HIS ARGUMENT THAT CAR PARKING IS NOT INTEGRAL PART OF RESIDENTIAL UNIT AND HENCE NOT ELIGIBLE FOR DEDUCTION; U/S 80IB ALSO IS INCORRECT AND CONTRARY, TO THE PROVISIONS.BF SECTION 80IB(10), AS DEDUCTION U/S 80IB IS AVAILABLE IN RESPECT OF PROFIT FROM HOUSING PROJECT, WHICH INCLUDES NOT ONLY RESIDENTIAL FLAT BUT ALSO DEVELOPMENT OF COMMON AREAS AND OTHER FACILITIES (INCLUDING CAR PARKING AS HELD BY THE HON'BLE BOMBAY HIGH COURT AND THE ITAT, KOLKATA AS MENTIONED IN PRECEDING PARAS. ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 7 FURTHER THE STAND TAKEN BY THE AO THAT CAR PARKING SOLD; BY THE ASSESSEE IS ILLEGAL IN VIEW OF RECENT SUPREME COURT JUDGMENT, HENCE NOT ELIGIBLE FOR DEDUCTION U/S 80IB IS NOT TENABLE FOR THE REASON THAT, ISSUES DEALT WITH IN RECENT SUPREME COURT JUDGMENT IN THE CASE OF NAHALCHAND LALOOCHAND PRIVATE LIMITED 'VS PANCHALI COPPRATIVE HOUSING SOCIETY LTD. IN CIVIL APPEAL NO. 2544 OF 2010, ARE NOT SIMILAR TO 'THE CASE OF THE APPELLANT. IN THAT CASE PROMOTERS WANTED TO SELL STILT PARKING AREA AS GARAGE TO OTHERS, WHEREAS IN INSTANT CASE CAR PARKING AREA ARE ALLOTTED TO FLAT OWNERS ONLY TO PARK THEIR CARS. : ALSO IN THE ORDER DATED 7.11.2012 WHICH WAS TENDERED MUCH LATER THAN THE ORDER PASSED BY HON'BLE SUPREME COURT, THE ITAT, MUMBAI IN PURVANKARA PROJECTS LTD. VS DCIT , CENTRAL CIRCLE-2 ITA NOS. 4347 TO 4351 FOR ASSESSMENT YEAR 2004-05 TO 2008-09 HAS HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IB IN RESPECT OF AMOUNT RECEIVED FROM CAR PARKING RESPECTFULLY FOLLOWING THE' JUDGMENT OF HON'BLE BOMBAY HIGH COURT THE CASE OF PURVANKARA PROJECTS LIMITED AND OF ITAT IN CASE OF VAMAN ESTATE IT IS HELD THAT THE AO WAS NOT RIGHT IN LAW-DEDUCTION U/S SOIB(IO) ON INCOME FROM SALE OF CAR PARKING. HENCE THE AO IS DIRECTED TO GRANT DEDUCTION OF RS.11,75,76,285/-U/S.80IB(10) IN RESPECT OF INCOME FROM SALE OF CAR PARKING. THE GROUND NO.2 OF THE APPEAL IS ALLOWED. 6. FROM THE AFORESAID ELABORATE OBSERVATIONS OF THE LD. CIT(A), WE DO NOT DEEM IT NECESSARY TO INTERFERE IN THE SAID FINDINGS OF THE LD. CIT(A) AND THE ISSUE IS ALSO DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT, SUPRA. ACCORDINGLY, THE GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 7. THE NEXT ISSUE TO BE DECIDED IN THE APPEAL OF THE REVENUE FOR A.Y.2009-10 IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING RELIEF TO THE ASSESSEE IN RESPECT OF CARRY FORWARD OF SHORT TERM CAPITAL LOSS OF RS.6,06,15,410/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 8 8. WE HAVE HEARD RIVAL SUBMISSIONS. AT THE OUTSET, WE FIND THERE IS ABSOLUTELY NO DISCUSSION BY THE LD. AO RELATING TO THIS CARRY FORWARD OF SHORT TERM CAPITAL LOSS OF RS.6,06,15,410/- IN HIS ENTIRE ASSESSMENT ORDER. ACCORDINGLY, THE LD. CIT(A) HAD ONLY DIRECTED THE LD. AO TO VERIFY THE RECORDS AND GIVE HIS FINDINGS WITH REGARD TO THE ELIGIBILITY OF CARRY FORWARD OF SHORT TERM CAPITAL LOSS OF RS.6,06,15,410/-. WE ARE UNABLE TO UNDERSTAND AS TO HOW THE REVENUE IS AGGRIEVED ON THIS DIRECTION OF LD. CIT(A). HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 9. GROUND NO.2 RAISED BY THE REVENUE FOR A.Y. 2009-10 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 10. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.1676/KOL/2014 FOR A.Y.2009-10 IS DISMISSED. ITA NO.1677/KOL/2014 A.Y.2010-11 11. LET US TAKE UP THE REVENUE APPEAL FOR A.Y.2010-11 IN ITA NO.1677/KOL/2014. 12. THE GROUND NO.1 RAISED BY THE REVENUE FOR A.Y.2010-11 IS SIMILAR TO GROUND NO.1 RAISED FOR A.Y.2009-10 BY THE REVENUE. THE DECISION RENDERED HEREINABOVE FOR THE A.Y.2009-10 IN RESPECT OF ELIGIBILITY OF DEDUCTION U/S.80IB(10) OF THE ACT FOR SALE OF CAR PARKING SPACE WOULD APPLY WITH EQUAL FORCE FOR A.Y.2010-11 ALSO. ACCORDINGLY, THE GROUND NO.1 RAISED BY THE REVENUE FOR A.Y.2010-11 IS DISMISSED. ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 9 13. THE GROUND NO.2 RAISED BY THE REVENUE FOR A.Y.2010-11 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 14. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 1677/KOL/2014 FOR A.Y.2010-11 IS DISMISSED. 15. LET US TAKE UP THE ASSESSEE APPEAL FOR A.Y.2009-10 IN ITA NO.1543/KOL/2014. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN NOT ALLOWING DEDUCTION OF RS. 4,05,48,257/- BEING PROFIT FROM SALE OF RESIDENTIAL UNITS WITH UTILITY ROOMS ALLEGEDLY HAVING CORRECT BUILT UP AREA EXCEEDING 1500 SQ.FT. WHILE COMPUTING THE DEDUCTION U/S.80IB (10) OF THE ACT. 16. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE SOLD RESIDENTIAL FLATS AND UTILITY ROOMS IN THE HOUSING PROJECT AND RECEIPTS FROM PROFIT FROM SALE OF FLATS AND UTILITY ROOMS WERE CLAIMED TO BE ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT. THE LD. AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF SALES WITH BIFURCATION OF UNIT WISE AREA OF FLATS AND UTILITY ROOMS SOLD. IN RESPONSE, THE DETAILS WERE FURNISHED BY THE ASSESSEE COMPANY. FROM THE PERUSAL OF THE DETAILS, THE LD. AO OBSERVED THAT IN RESPECT OF 73 PARTIES, THE ASSESSEE HAD SOLD FLATS ALONG WITH UTILITY ROOMS WHEREIN THE TOTAL AREA HAD EXCEEDED THE LIMIT OF 1500 SQ. FT WHICH HAD RESULTED IN VIOLATION OF PROVISIONS OF SECTION 80IB(10)(C) OF THE ACT. ACCORDINGLY, THE LD. AO SOUGHT TO DISALLOW THE DEDUCTION U/S.80IB(10) OF THE ACT IN RESPECT OF SAID 73 PARTIES IN THE HOUSING PROJECT. THE LD. AO ALSO OBSERVED THAT ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 10 THE TOTAL RECEIPTS FROM SUCH SALE OF FLATS AND UTILITY ROOMS WAS RS.32,56,33,441/- AND THE COST OF SUCH SALES WAS RS.26,39,35,183/-. THE PROFIT OF RS.4,05,48,257/- BEING THE PROFIT FROM SALE OF FLATS WITH UTILITY ROOMS EXCEEDING 1500 SQ.FT WAS NOT ELIGIBLE FOR DEDUCTION U/S.80IB(10) OF THE ACT. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) AS UNDER:- 'THAT THE LEARNED. AO ERRED IN DISALLOWING A SUM OF RS.4,05,48,357/- BEING, PROFIT FROM RESIDENTIAL UNITS WITH UTILITY ROOMS HAVING, AGGREGATE AREA EXCEEDING 1500 SQ.FT WHILE DETERMINING DEDUCTION, ALLOWABLE U/S. 80IB(10). AS PER THE KOLKATA MUNICIPAL CORPORATION RULES , AND NATIONAL BUILDING CODE THESE UTILITY ROOMS ARE NOT HABITABLE AND AS SUCH THE AREA OF SUCH UTILITY ROAMS CANNOT. BE CLUBBED WITH. THE AREA OF THE RESIDENTIAL FLAT, THE UTILITY ROOMS ARE LOCATED AT A DIFFERENT PLACE AND NOT ADJOINING THE RESIDENTIAL FLAT. AS PER SEC 80IB(10) (C); THE MAXIMUM, BUILT UP AREA OF A RESIDENTIAL UNIT SHALL BE 1500 SQ.FI INCASE OF THE GIVEN PROJECT OF THE ASSESSEE. THE BUILT UP AREA HAS BEEN DEFINED UNDER CLAUSE (A) OF SUB-SECTION 14 OF SEC 80IB AS FOLLOWS: 'BUILT UP AREA' MEANS THE INNER, MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, .INCLUDING THE -PROMOTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WALLS BUT DOES NOT. INCLUDE THE COMMON .AREAS SHARED WITH OTHER RESIDENTIAL UNITS' SINCE THE UTILITY ROOMS ARE LOCATED AT A PLACE DIFFERENT FROM THAT OF THE RESIDENTIAL UNIT; IT CANNOT BE TERMED AS A PROJECTION OR INNER MEASUREMENT '.OF THE RESIDENTIAL UNIT AND HENCE CANNOT FARM A PART OF THE SAME FOR THE PURPOSE OF MEASURING -BUILT UP AREA OF 1500 SQ.FT OF SUCH UNIT SO AS TO RENDER IT INEGLIGIBLE FOR DEDUCTION U/S80IB(10). FURTHER A SEPARATE CONVEYANCE DEED HAS BEEN EXECUTED FOR TRANSFER OF UTILITY ROOM' TO THE RESPECTIVE PURCHASERS WHICH MAKES IT ALL THE. MORE EVIDENT THAT UTILITY ROOM CANNOT BE CLUBBED WITH RESIDENTIAL TO CALCULATE THE BUILT UP AREA OF THE RESIDENTIAL UNIT' 17. THE LD. CIT(A) DISMISSED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER:- ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 11 4.4. I DO NOT AGREE, WITH THE SUBMISSION OF THE ASSESSEE. IT IS NOT THE CASE OF THE ASSESSEE THAT UTILITY ROOMS WERE SOLD INDEPENDENT OF RESIDENTIAL FLATS. THEY HAVE BEEN SOLD WITH RESIDENTIAL FLATS ONLY, 'THUS DESPITE OF HAVING BEEN LOCATED SEPARATELY, BOTH UTILITY ROOM AND FLATS ARE A COMBINED UNIT AND, THEREFORE, THE LIMIT OF AREA CONTEMPLATED IN SECTION 80 IB(10)(C) WILL APPLY TO THE TOTAL COMBINED AREA OF UTILITY ROOM AND THE FLAT. FURTHER THE ARGUMENT OF THE APPELLANT THAT SEPARATE CONVEYANCE DEED WERE EXECUTED IN REGARD TO FLAT3; : AND UTILITY ROOMS CAN 'AT BEST BE DESCRIBED AS AN ATTEMPT TO AVOID TAX' LIABILITY BY DELIBERATELY KEEPING THE FLAT AREA WITHIN STIPULATED LIMIT OF 1500 SQ FT. SINCE THE TOTAL AREA HAS EXCEEDED THE LIMIT OF 1500 SQUARE FEET,; THE DEDUCTION UNDER SECTION 80IB(10)CANNOT BE ALLOWED IN RESPECT THEREOF I THEREFORE, CONFIRM THE DISALLOWANCE OF THE CLAIM OF RS.4,05,48,257/- UNDER SECTION 80IB(10). THE GROUND NO. 3 IS, THEREFORE, DISMISSED. 18. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 19. WE HAVE HEARD RIVAL SUBMISSIONS. WE FIND THAT THE LD. DR VEHEMENTLY ARGUED THE INTENTION BEHIND INTRODUCTION OF GRANT OF DEDUCTION U/S.80IB(10) OF THE ACT THAT BY STATING THAT THE SAME IS MEANT FOR MIDDLE CLASS UNDER AFFORDABLE HOUSING CATEGORY AND THAT THE SAID DEDUCTION SHOULD BE STRICTLY CONSTRUED. THE UTILITY ROOMS IN THE INSTANT CASE IS NOTHING BUT SERVANT QUARTERS. THE LD. DR VEHEMENTLY ARGUED THAT WHETHER THE SERVANT QUARTER IS SEPARATED FROM THE MAIN RESIDENTIAL UNIT OR ATTACHED TOGETHER IS OF NO RELEVANCE AT ALL, IN AS MUCH AS, THE SAID SERVANT QUARTER (UTILITY ROOM) CANNOT BE SOLD INDEPENDENTLY TO ANY OUTSIDER OTHER THAN THE PERSON WHO PURCHASES THE RESIDENTIAL UNIT IN THE HOUSING PROJECT. IN THE INSTANT CASE, THESE 73 FLATS WHICH WERE SOLD TOGETHER WITH UTILITY ROOMS HAD INDEED EXCEEDED 1500 SQ. FT THEREBY VIOLATING THE REQUIREMENTS OF 80IB(10)(C) OF THE ACT AND THE LD. AO HAD RIGHTLY DENIED ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 12 DEDUCTION TO THE ASSESSEE PROPORTIONATELY, ONLY IN RESPECT OF THESE 73 UNITS. HE ALSO ARGUED THAT THE SERVANT QUARTERS BEING ATTACHED WITH THE FLAT OWNERS WERE NOT ATTACHED WITH THE FLAT OWNERS IS OF NO RELEVANCE IN VIEW OF THE FACT THAT THE SERVICES OF THE SERVANT MAID RESIDING IN THAT SERVANT QUARTERS WERE UTILIZED ONLY BY THE CONCERNED FLAT OWNERS. HENCE, IT IS QUITE LOGICAL TO CONSIDER THE EXTENT OF SQ.FT OCCUPIED IN THE UTILITY ROOM ALSO TOGETHER WITH THE RESIDENTIAL UNIT FOR THE PURPOSE OF RECKONING THE LIMIT OF 1500 SQ.FT WHILE COMPUTING THE DEDUCTION U/S.80IB(10) OF THE ACT. 19.1. WE FIND THAT THE LD. AR ARGUED THAT AT BEST THE SERVANT QUARTER (UTILITY ROOM) COULD BE CONSTRUED AS TWO UNITS HELD BY THE FLAT OWNER I.E., RESIDENTIAL UNIT PLUS ONE SERVANT QUARTER. HE ARGUED THAT THERE IS NO PROHIBITION FOR ONE FLAT OWNER TO HOLD MORE THAN ONE UNIT. HE ALSO DREW THE ATTENTION OF BENCH TO SECTION 80(IB)(10)(E) OF THE ACT WHICH WAS INSERTED BY THE FINANCE ACT 2009 W.E.F. 01/04/2010 (APPLICABLE FROM A.Y.2010-11 ONWARDS) WHEREIN THE SPECIFIC PROHIBITION AS TO A PERSON CANNOT HOLD MORE THAN ONE UNIT WAS BROUGHT IN THIS SECTION. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PROVISION IS REPRODUCED HEREUNDER:- NOT MORE THAN ONE RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO ANY PERSON NOT BEING AN INDIVIDUAL,AND 19.2. THE LD. AR REBUTTED OBSERVATION OF THE LD. DR THAT ASSESSEES CASE FALLS IN 80IB(10)(F) BY STATING THAT THE SAID PROVISION ALSO WAS INTRODUCED ONLY FOR A.Y.2010-11 AND ACCORDINGLY, CANNOT BE MADE ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 13 APPLICABLE TO THE YEAR UNDER APPEAL. FOR THE SAKE OF CONVENIENCE, PROVISIONS OF SECTION 80IB(10)(F) IS REPRODUCED BELOW:- (F) IN A CASE WHERE A RESIDENTIAL UNIT IN THE HOUSING PROJECT IS ALLOTTED TO A PERSON BEING AN INDIVIDUAL, NO OTHER RESIDENTIAL UNIT IN SUCH HOUSING PROJECT IS ALLOTTED TO ANY OF THE FOLLOWING PERSONS, NAMELY:- (I) THE INDIVIDUAL OR THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL. (II) THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA (III) ANY PERSON REPRESENTING SUCH INDIVIDUAL, THE SPOUSE OR THE MINOR CHILDREN OF SUCH INDIVIDUAL OR THE HINDU UNDIVIDED FAMILY IN WHICH SUCH INDIVIDUAL IS THE KARTA. 19.3. LD. AR PLACED ON RECORD THE COPY OF ALLOTMENT LETTER OF UTILITY ROOMS (SAMPLE COPIES) IN PAGES 74 TO 76 OF THE SUPPLEMENTARY PAPER BOOK. WE FIND THAT THE LD. DR PLACED RELIANCE ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. VS. RAGHAVENDRA CONSTRUCTIONS REPORTED IN 354 ITR 194 (KAR). THE OPERATIVE PORTION THEREON IS REPRODUCED HEREUNDER: 8. THEREFORE, THE INTENTION IS CLEAR. IN CALCULATING THE BUILT-UP AREA IT IS ONLY THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT ON THE FLOOR LEVEL, WHICH HAVE 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 SAID RESIDENTIAL UNIT IS PROVIDED THE FACILITY OF COMMON AREASHARED WITH OTHER RESIDENTIAL UNITS SUCH COMMON AREAS HAVE TO BE EXCLUDED WHILE COMPUTING THE BUILT-UP AREA. THE LANGUAGE EMPLOYED IN DEFINING THE BUILT-UP AREA AS THE COMMON AREA SHARED WITH OTHER RESIDENTIAL UNITS, IT DOES NOT MEAN THAT EVERY COMMON AREA SHOULD BE SHARED WITH OTHER RESIDENTIAL UNITS. IF THAT AREA DOES NOT EXCLUSIVELY BELONG TO THE OWNER OF THE RESIDENTIAL UNIT AND IF HE HAS TO SHARE THAT 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 COMMON AREA IS NOT THE SUBJECT-MATTER OF SALE ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 14 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 SHARE IT WITH OTHER 159 OWNERS OF THE RESIDENTIAL UNITS OR THEY HAVE TO SHARE IT WITH THE ADJOINING OWNER OF THE RESIDENTIAL UNIT, THIS 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 1500 SQ. FT. AND, THEREFORE, THE ASSESSEE WAS ENTITLED TO 100 PER CENT TAX EXEMPTION ON THIS PROJECT. HOWEVER, THE APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL HAVE NOT EXTENDED THE SAID BENEFIT TO 16 RESIDENTIAL UNITS. AS THE ASSESSEE HAS NOT PREFERRED ANY APPEAL AGAINST THE SAID ORDER, IT WILL NOT BE APPROPRIATE FOR THIS COURT TO EXTEND THE SAID BENEFIT IN THESE PROCEEDINGS. HOWEVER, AS THE LAW STANDS TODAY, IN VIEW OF THE INTERPRETATIONS PLACED BY THEM ON THE AFORESAID PROVISIONS, THE ASSESSEE HAS NOT VIOLATED THE PROVISIONS OF SECTION 80-IB (10) OF THE ACT AND IN FACT WAS ENTITLED TO 100 PER CENT, TAX EXEMPTION ON THE PROFITS DERIVED FROM THE PROJECT. THEREFORE, THE SUBSTANTIAL QUESTION OF LAW FRAMED IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 19.4. WE FIND THAT SERVANT QUARTER CANNOT BE SOLD INDEPENDENTLY TO ANY OTHER PERSON OTHER THAN THE FLAT OWNER TO WHOM SAID SERVANT QUARTER IS ATTACHED. IT IS OF ABSOLUTELY NO RELEVANCE WHETHER SERVANT QUARTER DOCUMENTATION HAS BEEN MADE BY WAY OF A SEPARATE CONVEYANCE DEED OR BY WAY OF SEPARATE LETTER TO THE CONCERNED FLAT OWNER. SUBSTANCE OF THE TRANSACTION NEEDS TO BE SEEN THAN ITS FORM. WE FIND THAT THE DECISION PLACED ON RECORD BY THE LD. DR OF HONBLE KARNATAKA HIGH COURT SUPRA CLEARLY SUPPORTS OUR UNDERSTANDING OF THE EXPRESSION BUILT UP AREA CLEARLY DEFINED IN SECTION 80IB(10)(14) OF THE ACT TO INCLUDE THE INNER MEASUREMENTS OF ALL THE RESIDENTIAL UNITS ON THE FLOOR LEVEL. IT IS NOT IN DISPUTE THAT BY TAKING INTO ACCOUNT INNER MEASUREMENTS OF THE 73 RESIDENTIAL UNITS PLUS THEIR RESPECTIVE SERVANT QUARTERS, THE TOTAL EXPENDITURE EXCEEDED 1500 SQ. FT THEREBY LEADING TO VIOLATION OF 80IB ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 15 (10(C) OF THE ACT. HENCE, WE HOLD THAT THE LD. AO HAD RIGHTLY DENIED DEDUCTION U/S.80IB(10) OF THE ACT TO THE EXTENT OF UTILITY ROOMS (SERVANT QUARTERS) IN THE SUM OF RS.4,05,48,257/-. ACCORDINGLY, GROUND NO.1 RAISED BY THE ASSESSEE IS DISMISSED. 20. GROUND NO.2 RAISED BY THE ASSESSEE FOR A.Y.2009-10 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 1543/KOL/2014 IS DISMISSED. 22. LET US TAKE UP ASSESSEE APPEAL FOR THE A.Y.2010-11 IN ITA NO.1544/KOL/2014. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN NOT ALLOWING DEDUCTION U/S.80IB(10) OF THE ACT IN THE SUM OF RS.143,05,014/- ON THE BASIS OF INACCURATE MEASUREMENT OF BUILT UP AREA OF FOUR FLATS. 23. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE LD. AO FROM THE LIST OF FLATS FURNISHED BY THE ASSESSEE COMPANY IN RESPECT OF ITS RESIDENTIAL PROJECT AT 61, B.L. SHAH ROAD, KOLKATA 700 053 NOTICED THAT THE BUILT UP ARE OF THE FOLLOWING FOUR FLATS WERE ABOVE 1500 SQ.FT. NAME UNIT NO. SHRI HINDOLE GHOSH 313P1A SHRI ASHOK KUMAR MITTAL 313P1D SHRI SOHAN KUMAR KOTRIWAL 313P2C ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 16 SHRI NILESH AGARWAL 313P2B 24. THE LD. AO IN ORDER TO ASCERTAIN THE EXACT BUILT UP AREA OF THE AFORESAID FLATS, MADE REFERENCE TO THIS DIVISIONAL VALUATION OFFICER, KOLKATA VIDE OFFICE LETTER DATED 30/01/2013 REQUESTING HIM TO CARRYOUT PHYSICAL VERIFICATION OF THE SIZE OF THE BUILT UP AREA OF THE AFORESAID FOUR FLATS. THE VALUATION OFFICER VIDE LETTER DATED 11/03/2013 INFORMED THAT THEY COULD MANAGE TO MEASURE THE TERRACE FLOOR OF BLOCK H-2 OF FLATS P- 2 AND P-1 AS THEY WERE DENIED ENTRY TO ANY OF THE FLATS. THE LD. AO NOTICED THAT FROM THE DETAILS OF THE MEASUREMENT AS FORWARDED BY THE VALUATION OFFICER REVEALED THAT BOTH THE FLATS WERE HAVING BUILT UP AREAS OF MORE THAN 1500 SQ. FT. I.E., ONE HAVING 1642.19 SQ. FT AND THE OTHER HAVING 1512.43 SQ. FT. 25. THE LD. AO OBSERVED IN HIS ORDER THAT FLATS OF TYPE P-1 AND P-2 HAVING SAME BUILT UP AREA. THE VALUATION OFFICERS REPORT WAS SUBMITTED TO THE ASSESSEE WITH A SHOW-CAUSE NOTICE AS TO WHY DEDUCTION U/S.80IB (10) OF THE ACT SHOULD NOT BE DENIED IN RESPECT OF AFORESAID FOUR FLATS IN VIEW OF THE FACT THAT THEY ARE HAVING BUILT UP AREA OF MORE THAN 1500 SQ. FT. THE LD. AO OBSERVED THAT NO SATISFACTORY APPLICATION WAS AFFORDED BY THE ASSESSEE IN THIS REGARD. THE LD. AO OBSERVED THAT THE PROFITS DERIVED FROM THE ELIGIBLE HOUSING PROJECT OF RS.96,05,14,373/- WORKED OUT TO 45.70% OF TOTAL SALES OF THE HOUSING PROJECT IN THE SUM OF RS.210,16,67,854/-. THE LD. AO ALSO OBSERVED THAT THE SALE PROCEEDS IN ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 17 RESPECT OF AFORESAID FOUR FLATS (UNIT NOS.313P1A, 313P2B, 313P2C & 313P1D) IS RS.3,13,02,000/-. THE LD. AO APPLIED THE SAME PROFIT PERCENTAGE OF 45.70% ON THE SAID SALE VALUE OF RS. 3,13,02,000/- AND DISALLOWED DEDUCTION U/S.80IB(10) OF THE ACT IN THE SUM OF RS.1,43,05,014/- (45.70% OF RS.3,13,02,000/-.) 26. BEFORE THE LD. CIT(A), THE ASSESSEE STATED THAT IT IS VERY CLEAR IN THE VALUATION REPORT ISSUED BY THE DIVISIONAL VALUATION OFFICER THAT THE SITE IN QUESTION WAS INSPECTED ON 18/02/2013 BUT ENTRY WAS DENIED INTO ANY OF THE FLATS FOR MAKING THE MEASUREMENT. ACCORDINGLY, THE VALUATION OFFICER HAD MANAGED TO MEASURE THE TERRACE FLOOR OF THE RELEVANT FLAT TYPES FROM WHICH IT IS NOT POSSIBLE TO CALCULATE THE EXACT BUILT UP AREA OF ANY TYPICAL FLAT. IT WAS ALSO POINTED OUT THAT THE VALUATION OFFICER WHILE CALCULATING THE BUILT UP AREA FROM TERRACE HAD ALSO INCLUDED THE AREA OF TERRACE GARDEN WHICH IS INCORRECT. TO SUMMARIZE, THE ASSESSEE PLEADED BEFORE THE LD. CIT(A) THAT THE VALUATION REPORT TO THE DIVISIONAL VALUATION OFFICER CANNOT BE RELIED UPON FOR THE FOLLOWING REASONS:- (I) PHYSICAL VERIFICATION WAS NOT CARRIED OUT PROPERLY ON THE RELEVANT FLATS IN RESPECT OF ITS DISALLOWANCE HAS BEEN MADE. (II) THE VALUATION OFFICER HAS HIMSELF STATED THAT EXACT BUILT UP AREA COULD NOT BE CALCULATED FROM THE TERRACE. (III) TERRACE GARDEN AREA HAS ALSO BEEN INCLUDED IN THE CALCULATION OF BUILT UP AREA OF ROOMS. ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 18 27. THE LD. CIT(A) DISMISSED THE ENTIRE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE DID NOT DISPUTE THE REPORT OF DVO AT THE ASSESSMENT STAGE AND HENCE, THE SAME CANNOT BE DISPUTED BY HIM AT THE FIRST APPELLATE STAGE. 28. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 29. WE HAVE HEARD THE RIVAL SUBMISSIONS BEFORE US. THE LD. AR WAS ONLY TRYING TO DISPUTE THE VALUATION REPORT OF DVO BY STATING THAT THE VALUATION OFFICER OUGHT NOT TO HAVE INCLUDED THE MEASUREMENT OF TERRACE GARDEN WHILE RECKONING THE NEAR MEASUREMENT OF BUILT UP AREA AS UNDER:- TYPE UNIT P1 TYPE 13.59M 2 P3 TYPE 16.48M 2 30. WE FIND 80IB(14)(A) DEFINES BUILT UP AREA FOR THE PURPOSE OF SECTION 80IB OF THE ACT AS UNDER:- BUILT UP AREA MEANS THE NEAR 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. NOW, SHORT POINT ARISES FOR OUR CONSIDERATION IS AS TO WHETHER THE TERRACE GARDEN AREA IS TO BE INCLUDED FOR THE PURPOSE OF MEASUREMENT OF 1500 SQ.FT SO AS TO DECIDE THE ELIGIBILITY OF DEDUCTION U/S.80IB(10) OF THE ACT. 31. WE FIND THAT THIS ISSUE HAS BEEN THE SUBJECT MATTER OF ADJUDICATION BY THE CO-ORDINATE BENCH OF KOLKATA TRIBUNAL IN THE CASE OF ASHIANA ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 19 AMAR DEVELOPERS VS. ITO REPORTED IN 178 TTJ (KOL)474 WHEREIN IT WAS HELD AS UNDER:- 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 FACT. FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF NATIONAL BUILDING CODE OF INDIA IS REPRODUCED HEREIN BELOW:- 2.65 PLINTH AREA-THE BUILT UP COVERED AREA MEASURED 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 COVERED BY THE FOLLOWING IN THE OPEN SPACES IS EXCLUDED FROM COVERED AREA. A) GARDEN, ROCKERY, WELL AND WELL STRUCTURES, PLANT NURSERY, WATERPOOL, SWIMMING POOL (IF UNCOVERED), PLATFORM ROUND A TREE, TANK, FOUNTAIN, BENCH, CHABUTRA WITH OPEN TOP AND UNENCLOSED 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 PORTICO, CANOPY, SLIDE, SWING, UNCOVERED STAIRCASE, RAMPS AREAS COVERED BY CHHAJJA AND THE LIKE; AND D) WATCHMENS BOOTH, PLUMPHOUSE, GARBAGE SHAFT, ELECTRIC CABIN OR SUB- STATIONS, AND SUCH OTHER UTILITY STRUCTURES MEANT FOR THE SERVICES OF THE BUILDING UNDER CONSIDERATION. NOTE- FOR THE PURPOSE OF THIS PART, COVERED AREA EQUALS THE PLOT AREA MINUS THE AREA DUE FOR OPEN SPACES. 4.2.1. WE FIND THAT THE LEARNED AO DURING THE COURSE 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 EFFECTING THE SALE OF RESIDENTIAL UNITS DURING THE ASST YEAR UNDER APPEAL. THE ASSESSEE DULY MADE AVAILABLE THE COPIES OF THE BROCHURE ISSUED IN ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 20 ORDER TO ATTRACT PROSPECTIVE BUYERS AND ALSO COPIES OF ORIGINAL SALE DEEDS BEFORE THE LEARNED AO WHICH WERE DULY RETURNED BY THE LEARNED AO AFTER VERIFICATION. WE FIND THAT THE LEARNED AO CALCULATED THE SUPER BUILT UP AREA OF EACH BUILDING BASED ON THE BROCHURES BY INCLUDING THE AREA OF OPEN TERRACE AND THEREFROM ESTIMATED THE BUILT UP AREA BY 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 BROCHURES 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 WAS REGISTERED WITH REGISTRAR FOR STAMP DUTY PURPOSES, THE TOTAL BUILT UP AREA OF EACH BUILDING WAS BELOW THE MAXIMUM AREA SPECIFIED IN SECTION 80IB(10) OF THE ACT. THE LEARNED AO SIMPLY IGNORED 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 BEYOND GROUND LEVEL. A TERRACE HAS MORE SPACE AND WITH AN OPEN-TOP. WE FIND THAT THE DEFINITION OF BUILT UP AREA MEANS 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. HENCE IT COULD BE CONCLUDED THAT THE OPEN TERRACE IS 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 ASSOCIATES 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 TERRACE. 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 BELOW WERE NOT ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 21 JUSTIFIED IN TAKING THE OPEN TERRACE AS BALCONY / VERANDAH REJECTING THE CLAIM OF THE ASSESSEE. 4.2.4. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION 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 RENDERED 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 MAKING 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(10) 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 APPEAL 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 CONSIDERED THE ASSESSEE'S APPEAL 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. BY 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 REVENUES CONTENTION THAT FOR THE PURPOSE OF SECTION 80- IB(10} DEDUCTION, THE ASSESSEE SHOULD HAVE OWNED THE PROPERTY IS CONCERNED, THE SAME IS LIABLE TO BE REJECTED BY REASON OF OUR DECISION RENDERED IN T.C.NOS. 581, 1186 OF 2008 AND 136 OF 2009 - CEEBROS HOTELS PVT LTD V. DEPUTY COMMISSIONER OF INCOME TAX ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 22 DATED 19.10.2012. HENCE, THE APPEALS FILED BY THE REVENUE 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 APPEALS IN T.C.NOS.316 AND 317 OF 2012 STAND ALLOWED, HOLDING THAT THE TERRACE 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. WADHWANI 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 LAW BEFORE THE HON'BLE MADRAS HIGH COURT WOULD REVEAL THAT THE ISSUE RELATED TO WHETHER OPEN SPACE OF THE TERRACE WOULD FALL WITHIN THE EXPRESSION 'BUILT-UP AREA'. THE FACTS BEFORE THE HON'BLE HIGH COURT WERE THAT ASSESSEE HAD CONSTRUCTED VARIOUS APARTMENT BLOCKS AND EACH BLOCK HAD 64 APARTMENTS. THE APARTMENTS LOCATED AT FIRST TO SIXTH FLOOR WERE OF AREAS LESS THAN 1500 SQ.FT.. HOWEVER, THE FLATS LOCATED ON THE 7TH FLOOR HAD THE ADVANTAGE OF EXCLUSIVE OPEN TERRACE. WHILE CONSIDERING THE RELIEF U/S 801B(10) OF THE ACT, THE ASSESSING OFFICER TOOK INTO CONSIDERATION THE AREA OF SUCH EXCLUSIVE/PRIVATE OPEN TERRACE AS A PART OF THE BUILT-UP AREA OF THE UNITS LOCATED AT THE 7TH FLOOR. AFTER CONSIDERING THE ABOVE ASPECT, THE BUILTUP AREA OF THE FLATS LOCATED AT THE 7TH 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 FULFILLED. 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 'BUILT-UP AREA' FOR THE PURPOSE OF EXAMINING THE CONDITION PRESCRIBED IN CLAUSE (C) OF SECTION 8018(10) OF THE ACT. IN THIS VIEW OF THE MATTER, THE 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 -DR 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 ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 23 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 TO THE INDIAN STANDARD METHOD OF MEASUREMENT OF PLINTH, CARPET AND RENTABLE AREAS OF BUILDINGS AS ISSUED OF BUREAU OF INDIAN STANDARDS AND ALSO THE MEANING OF THE AFORESAID EXPRESSION ASSIGNED AS PER THE RULES AND REGULATIONS OF THE LOCAL 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 CONSIDERED 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 PURCHASER WOULD JUSTIFY THE INCLUSION OF SUCH TERRACE AREA INTO THE CALCULATION OF 'BUILT-UP AREA'. BEFORE US ALSO, THE 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 SUB- CLAUSE (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 REGULATION AS TO WHAT CONSTITUTES THE PLINTH AREA, WHICH IS THE BUILTUP AREA, IT IS DIFFICULT FOR US TO AGREE WITH THE CONTENTION OF THE REVENUE AS WELL AS THE REASONING OF THE TRIBUNAL THAT FOR THE PURPOSE OF CONSIDERING THE CLAIM UNDER SECTION 80-IB, THE BUILT-UP AREA WOULD BE DIFFERENT FROM WHAT HAS BEEN GIVEN APPROVAL BY THE LOCAL AUTHORITY, ON A BUILDING PROJECT. GIVEN THE FACT THAT DURING 2003-04 THERE WAS NO DEFINITION AT ALL ON WHAT A BUILT-UP AREA IS, THE UNDERSTANDING 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 ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 24 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-DR 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 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 PRECEDENTS, 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. 32. HOWEVER, WE DIRECT THE LD. AO TO VERIFY THE WORKINGS TO BE GIVEN BY THE ASSESSEE IN TERMS OF SQ.FT TO ENSURE WHETHER THE AFORESAID FOUR FLATS AFTER EXCLUDING THE TERRACE GARDEN AREA FALL WITHIN THE LIMITS OF 1500 SQ.FT. RESPECTFULLY FOLLOWING THE AFORESAID JUDGEMENT AND IN VIEW OF THE AFORESAID DIRECTIONS, WE DEEM IT FIT TO REMAND THIS ISSUE TO THE FILE OF THE LD. AO TO DECIDE THE SAME IN THE LIGHT OF THE AFORESAID DECISION AND IN LIGHT OF THE AFORESAID DIRECTIONS. ACCORDINGLY, THE GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES FOR A.Y.2010-11. ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 25 33. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE ACTION OF THE LD. AO IN NOT ALLOWING CLAIM OF WRITE OFF OF SUNDRY BALANCES IN THE SUM OF RS.60,03,282/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 34. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE DURING THE YEAR, THE ASSESSEE HAD WRITTEN OFF OF CERTAIN SUNDRY BALANCES OF RS.60,03,282/- AND CLAIMED THE SAME AS DEDUCTION. IT WAS PLEADED BY THE ASSESSEE THAT THE ABOVE BALANCES REPRESENTED BUSINESS ADVANCES GIVEN BY THE ASSESSEE ON ACCOUNT OF REAL ESTATE PROJECT AND SINCE THE SAME WERE DECLARED BAD AND IRRECOVERABLE AND ALL THE POSSIBLE MEASURES TAKEN BY THE ASSESSEE TO RECOVER THE SAME WERE IN VAIN, THE ASSESSEE DECIDED TO WRITE OFF THE SAME DURING THE YEAR AND CLAIMED THE SAME AS DEDUCTION. THE LD. AO SPECIFICALLY ASKED THE ASSESSEE TO PROVIDE THE DETAILS OF SUCH ADVANCES GIVEN AND ALSO TO PROVE THE BUSINESS NEXUS THEREON. LD. AO ALSO DIRECTED TO FURNISH THE ASSESSEE TO ELABORATE AND PROVIDE EVIDENCES FOR PROVING THE FACT THAT THE SAID ADVANCE HAD BECOME IRRECOVERABLE AND THE STEPS TAKEN FOR RECOVERY OF THE SAME FROM THE SIDE OF THE ASSESSEE. SINCE, NO EXPLANATION WAS OFFERED BY THE ASSESSEE IN THIS REGARD, LD. AO CHOSE TO DISALLOW THE SAME. EVEN BEFORE THE LD. CIT(A), THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCES IN SUPPORT OF ITS CONTENTIONS. ACCORDINGLY, THE LD. CIT(A) UPHELD THE ACTION OF THE LD. AO. ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 26 35. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 36. WE HAVE HEARD RIVAL SUBMISSIONS. THE LD. AR MERELY MADE AN ORAL SUBMISSION THAT THESE ADVANCES WERE MADE IN THE COURSE OF BUSINESS AND THE SAME HAD BECOME IRRECOVERABLE WHICH EVENTUALLY LEAD TO WRITE OFF OF THE SAME BY THE ASSESSEE DURING THE YEAR. APART FROM THIS ORAL SUBMISSION, HE COULD NOT SUBSTANTIATE HIS ARGUMENTS BY WAY OF ANY EVIDENCES. HENCE, WE DO NOT DEEM IT FIT TO INTERFERE IN THE ORDER OF THE LD. CIT(A) IN THIS REGARD, ACCORDINGLY, THE GROUND NO.2 RAISED BY THE ASSESSEE FOR THE A.Y.2010-11 IS DISMISSED. 37. GROUND NO.3 RAISED BY THE ASSESSEE WAS STATED TO BE NOT PRESSED AT THE TIME OF HEARING BY THE LD. AR. THE SAME IS RECKONED AS A STATEMENT FROM THE BAR AND ACCORDINGLY, THE GROUND NO.3 IS DISMISSED AS NOT PRESSED. 38. GROUND NO.4 RAISED BY THE ASSESSEE IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 39. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.1544/KOL/2014 FOR A.Y.2010-11 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.1543/KOL/2014 AND OTHER APPEALS M/S. SOUTH CITY PROJECTS 27 40. TO SUM UP:- AY APPEAL BY ITA NO. RESULT 2009-10 REVENUE 1676/KOL/2014 DISMISSED 2010-11 REVENUE 1677/KOL/2014. DISMISSED 2009-10 ASSESSEE 1543/KOL/2014 PARTLY ALLOWED FOR STATISTICAL PURPOSES 2010-11 ASSESSEE 1544/KOL/2014 PARTLY ALLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21/06/2019 SD/- SD/- (A.T.VARKEY) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA; DATED 21/06/2019 KARUNA SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, KOLKATA 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), KOLKATA. 4. CIT 5. DR, ITAT, KOLKATA 6. GUARD FILE. //TRUE COPY//