Shri Dilip Kanayalal Tilwani, Pune V. Income-tax Officer,

ITA 1779/PUN/2013

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7161 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-11-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 27-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Retrospective amendment; Competent authority
• Section: 80IB; 6; 12; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1779 /P U N/201 3 / ASSESSMENT YEAR : 20 07 - 08 SHRI DILIP KANAYALAL TILWANI, PROPRIETOR OF M/S. SHYAMA BUILDER, S. NO. 281/1 GURUPRASAD APARTMENTS, TANAJI NAGAR, CHINCHWAD, PUNE 411033 PAN : AAIPT6572C ....... / APPELLANT / V/S. INCOME TAX OFFICER, WARD 8(2), PUNE / RESPONDENT . / ITA NO . 1888/PUN/2013 / ASSESSMENT YEAR : 2007 - 08 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 8, PUNE ....... / APPELLANT / V/S. SHRI DILIP KANAYALAL TILWANI, PROP. SHYAMA BUILDER, S. NO. 281/1 GURUPRASAD APARTMENTS, TANAJI NAGAR, CHINCHWAD, PUNE 411033 PAN : AAIPT6572C / RESPONDENT ASSESSEE BY : S HRI SUNIL GANOO REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 0 9 - 11 - 2017 / DATE OF PRONOUNCEMENT : 15 - 1 1 - 2017 2 ITA NO S. 1779 & 1888/PUN/2013, A.Y. 2007 - 08 / ORDER PER VIKAS AWASTHY, JM : TH ESE TWO CROSS APPEALS BY THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - V, PUNE DATED 11 - 07 - 2013 FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN APPEAL IS DENIAL OF BENEFIT OF DEDUCTION U/S. 80IB(10) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) IN RESPECT OF SINGLE ROW HOUSE NEAR H BUILDING IN HOUSING PROJECT SHYAMA HERITAGE DEVELOPED BY THE ASSESSEE. THE BENEFIT OF DEDUCTION U/S. 80IB(10) HAS BEEN DENIE D IN RESPECT OF AFORESAID ROW HOUSE ON THE GROUND THAT BUILT UP AREA OF THE SAID HOUSE INCLUDING TERRACE IS MORE THAN 1500 SQ. FT. THE REVENUE IN ITS APPEAL HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING DEDUCTION U/S. 80IB (10) ON PRO - RATA BASIS IN RESPECT OF ELIGIBLE UNITS. 3. SHRI SUNIL GANOO APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THIS IS SECOND ROUND OF LITIGATION FOR ASSESSMENT YEAR 2007 - 08 BEFORE THE TRIBUNAL IN RESPECT OF HOUSING PROJECT SHYAMA HERITAGE . EARLIER , THE ASSESSEE APPROACHED TRIBUNAL IN ITA NO. 1136/PN/2011 FOR ASSESSMENT YEAR 2007 - 08 , AGAINST DENIAL OF DEDUCTION U/S. 80IB(10) ON ACCOUNT OF EXCESSIVE AREA EARMARKED FOR COMMERCIAL ESTABLISHMENT AND IN RESPECT OF BUILT UP AREA EXCEEDING 1500 SQ. FT. OF ROW HOUSE NEAR H BUILDING. THE CO - ORDINATE BENCH OF THE TRIBUNAL ALLOWED ASSESSEES CLAIM QUA COMMERCIAL AREA . HOWEVER, WITH RESPECT TO COMPUTATION OF BUILT UP AREA OF ROW HOUSE , THE MATTER WAS REMITTED BACK TO COMMISSIONER OF INCOME TAX (APPEALS) FOR 3 ITA NO S. 1779 & 1888/PUN/2013, A.Y. 2007 - 08 FRESH ADJUDICATION. THE LD. AR SUBMITTED THAT THE PROJECT WAS APPROVED PRIOR TO 31 - 03 - 2005 . THE DEFINITION OF BUILT UP AREA WAS NOT AVAILABLE UNDER THE PROVISIONS OF THE ACT PRIOR TO MARCH, 2005 . THE DEFINITIO N WAS INSERTED BY FINANCE (NO. 2) ACT, 2004 W.E.F. 01 - 04 - 2005. THE LD. AR SUBMITTED THAT IN REMAND PROCEEDINGS , THE COMMISSIONER OF INCOME TAX (APPEALS) SOUGHT REPORT FROM DEPARTMENTAL VALUATION OFFICER (DVO). THE DVO AFTER TAKING MEASUREMENTS HELD THAT THE BUILT UP AREA OF ROW HOUSE INCLUDING PROJECTED TERRACE OVER THE PARKING IS 1537.21 SQ. FT . ACCORDING TO THE ASSESSEE THE BUILT UP AREA OF SAID ROW HOUSE AS PER BUILDING CONTROL RULES OF PCMC IS 111.16 SQ. MTRS. THE AREA OF SAID ROW HOUSE HAS BEEN MEN TIONED IN COMPLETION CERTIFICATE DATED 30 - 09 - 2005 WHICH WAS PLACED BEFORE THE AUTHORITIES BELOW. THE LD. AR SUBMITTED THAT THOUGH THE DEFINITION OF BUILT UP AREA WAS INSERTED BY FINANCE ACT W.E.F. 01 - 04 - 2005 IT IS APPLICABLE RETROSPECTIVELY. TO SUPPORT H IS SUBMISSIONS , HE PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI NARESH T. WADHWANI VS. DY. COMMISSIONER OF INCOME TAX IN ITA NOS. 18, 19 & 20/PN/2013 FOR ASSESSMENT YEARS 2007 - 08 TO 2009 - 10 DECIDED ON 28 - 10 - 2014. THE L D. AR SUBMITTED THAT EVEN THOUGH THE BUILT UP AREA OF ROW HOUSE IN QUESTION IS LESS THAN 1500 SQ. FT., ASSUMING BUT NOT ADMITTING , EVEN IF IT IS MORE THAN 1500 SQ. FT. BUILT UP AREA AS COMPUTED BY DVO INCLUDES THE AREA OF TERRACE. IT IS A WELL SETTLED PRO POSITION THAT AREA OF TERRACE IS NOT TO BE INCLUDED WHILE DETERMINING BUILT UP AREA OF RESIDENTIAL UNIT. THE LD. AR PRAYED FOR REVERSING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. 3.1 THE LD. AR CONTENDED THAT THE REVENUE IN IT S APPEAL HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN GRANTING PRO - RATA DEDUCTION U/S. 80IB(10). NOW, IT IS A WELL SETTLED LAW THAT PRO - RATA 4 ITA NO S. 1779 & 1888/PUN/2013, A.Y. 2007 - 08 DEDUCTION U/S. 80IB(10) IS ADMISSIBLE IN RESPECT OF ELIGIBLE UNITS OF A HOUS ING PROJECT. THEREFORE, THE APPEAL OF REVENUE IS LIABLE TO BE DISMISSED. 4. ON THE OTHER HAND SHRI MUKESH JHA REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN REJECTING ASSESSEES CLAIM OF DEDUCTION U/S. 80IB(10) I N RESPECT OF ROW HOUSE NEAR H BUILDING. THE LD. DR SUBMITTED THAT THE BUILT UP AREA OF THE HOUSE IS MORE THAN 1500 SQ. FT. THUS, THERE IS A VIOLATION OF CLAUSE (C) OF SUB - SECTION 80IB(10) . HENCE, THE ASSESSEE IS INELIGIBLE FOR CLAIMING DEDUCTION U/S. 80 IB(10) ON THE ENTIRE PROJECT . 4.1 IN RESPECT OF APPEAL FILED BY THE DEPARTMENT THE LD. DR CONTENDED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN GRANTING PRO - RATA DEDUCTION U/S. 80IB(10) IN RESPECT OF ELIGIBLE UNITS. THERE IS NO PROVISION U /S. 80IB(10) FOR GRANTING PROPORTIONATE DEDUCTION IN RESPECT OF ELIGIBLE UNITS. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . THE SOLITARY ISSUE RAISED BY THE ASSESSEE IN APPEAL IS WITH RESPECT TO DISALLOWANCE OF DEDUCTION U/S. 80IB(10) ON ROW HOUSE , NEAR H BUILDING IN HOUSING PROJECT SHYAMA HERITAGE. THE AUTHORITIES BELOW HAVE REJECTED ASSESSEES CLAIM OF DEDUCTION U/S. 80IB( 10) IN RESPECT OF AFORESAID ROW HOUSE ON THE GROUND THAT THE BUILT UP AREA OF THE SAID HOUSE INCLUDING PROJECTED TERRACE EXCEEDS THE STATUTORY LIMIT OF 1500 SQ. FT. THE MATTER WAS REFERRED TO DVO. THE DVO COMPUTED THE TOTAL AREA OF HOUSE AS 142.81 SQ. MT RS. I.E. 1537.21 SQ. FT. THE FLOOR WISE AREA COMPUTED BY DVO IS AS UNDER : 5 ITA NO S. 1779 & 1888/PUN/2013, A.Y. 2007 - 08 SQ. MTRS. SQ. FT. GROUND FLOOR 65.83 708.89 FIRST FLOOR 65.78 708.05 SUB TOTAL 131.61 1416.94 PROJECTED TERRACE 11.20 120.55 TOTAL 142.81 1537.49 6. THE PROJECT OF THE ASSESSEE WAS APPROVED PRIOR TO 31 - 03 - 2005. THE BUILT UP AREA WAS NOT DEFINED PRIOR TO MARCH, 2015. THE DEFINITION OF BUILT UP AREA WAS INSERTED BY FINANCE (NO. 2) ACT, 2004 W.E.F. 01 - 04 - 2005. THEREFORE, THE COMMISSION ER OF INCOME TAX (APPEALS) RELIED ON THE DEFITION OF BUILT UP AREA AS GIVEN IN D C RULES OF MUNICIPAL CORPORATION. AS PER CLAUSE 2.12 OF DC RULES OF PUNE MUNICIPAL CORPORATION WHICH ARE PARI MATERIAL OF DC RULES OF PCMC DEFINES BUILT UP AREA AS UNDER : BU ILT UP AREA : AREA COVERED IMMEDIATELY ABOVE THE PLINTH LEVEL BY THE BUILDING OR EXTERNAL AREA OF ANY UPPER FLOOR WHICHEVER IS MORE EXCEPTING THE AREAS COVERED BY RULE NO. 15.4.2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER REFERRED TO RULE 15.4.2 R.W. RULE 15.4.1 OF DC RULES . THE RELEVANT EXTRACT OF RULE 15.4.1(C) ON WHICH COMMISSIONER OF INCOME TAX (APPEALS) HAS PLACED RELIANCE READS AS UNDER : IN THE RESIDENTIAL BUILDING IN R - 1 AND R - 2 ZONES, A BALCONY OR BALCONIES AT ROOF LEVEL OVER FLO OR (INCLUDING STILT FLOOR) OF A WIDTH OF 1.2 MTR. FROM BUILDING LINE (MEASURED PERPENDICULAR TO THE BUILDING LINE) TO THE OUTERMOST LINE OF T H E BALCONY MAY BE PERMITTED OVER HANGING SETBACKS WITHIN HIS OWN LAND AND COURTYARDS AND THIS SHALL BE SUBJECT TO A MAXIMUM OF 1/3 LENGTH OF PERIMETER OF BUILDING AND 10% OF THE FLOOR AREA OF EACH FLOOR. BALCONY SHALL BE PERMITTED TO PROJECT TO MARGINAL OPEN SPACE OF NOT LESS THAN 3 MTR IN WIDTH. 7 . B ALCONY AND TERRACE , WHETHER THEY ARE ONE AND THE SAME FOR THE PURPOSE OF DETERMINING BUILT UP AREA IS A MATTER OF DEBATE BETWEEN THE 6 ITA NO S. 1779 & 1888/PUN/2013, A.Y. 2007 - 08 DEPARTMENT AND THE ASSESSEE. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. AMALTAS ASSOCIATES REPORTED AS 389 ITR 175 HAS HELD THAT THE TERRACE IS NOT A PROJECTION AND IS DIFFERENCE FROM BALCONY. THE RELEVANT EXTRACT OF THE FINDINGS OF HONBLE HIGH COURT ARE AS UNDER : 8. SECTION 80(14) OF THE ACT CONTAINS DEFINITIONS FOR THE PURPOSE OF THE SAID SECTION. CLAUSE(A) THEREOF PROVIDES THAT BUILTUP AREA MEANS THE INNER MEASUREMENTS 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. THUS, THE BUILTUP AREA WOULD INCLUDE INNER MEASUREMENTS OF A RESIDENTIAL UNIT ON THE FLOOR LEVEL ADDED BY THICKNESS OF A WALL AS ALSO PROJECTIONS AND BALCONIES. THIS WOULD HOWEVER, EXCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. THIS EXCLUSION CLAUSE OF THE COMMON AREAS SHARED BY OTHER UNITS CANNOT BE APPLIED IN THE REVERSE. IN OTHER WORDS, THE MOMENT A CERTAIN AREA IS NOT SHARED BUT IS EXCLUSIVELY ASSIGNED FOR THE USE OF A PARTICULAR RESIDENTIAL UNIT HOLDER, WOULD NOT MEAN THAT SUCH AREA WOULD AUTOMATICALLY BE INCLUDED IN THE BUILTUP AREA. IN ORDER TO BE PART OF THE BUILTUP AREA, THE SAME MUST BE PART OF THE INNER MEASUREMENTS OF A RESIDENTIAL UNIT OR PROJECTION OR BALCONY. THE OPEN TERRACE SPACE ON THE TOP FLOOR OF A BUILDING WOULD NOT SATISFY THIS DESCRIPTION. IT WILL ALSO NOT BE COVERED IN THE EXPRESSION BALCONY. TERM 'BALCONY' HAS BEEN EXPLAINED IN WEBSTER'S THIRD INTERNATIONAL DICTIONARY (UNABRIDGED) AS UNROOFED PLATFORM PROJECTING FROM THE WALL OF A BUILDING, ENCLOSED BY A PARAPET OR RAILING, AND USUALLY RESTING ON BRACKETS OR CONSOLES. IT IS OFTEN USED AS SYNONYMS TO GALLERY, LOGGIA, VERANDA, PIAZZA, PORCH, PORTICO, STOOP ETC. IN THE CONTEXT OF RESIDENTIAL OR EVEN COMMERCIAL COMPLEXES, TERM 'BALCONY' HAS GAINED A DEFINITE COMMON PARLANCE MEANING. IT USUALLY CONSISTS OF A PROJECTION FROM A BUILDING COVERED BY A PARAPET OR RAILING AND MAY OR MAY NOT BUT USUALLY IS COVERED FROM THE TOP. THIS TERM 'BALCONY' CERTAINLY WOULD NOT INCLUDE AN OPEN TERRACE ADJOINING A BEDROOM OR ANY OTHER CONSTRUCTED AREA OF A PENTHOUSE. THE T ERRACE IS NOT A PROJECTION. ALTHOUGH THE HONBLE HIGH COURT HAS EXPLAINED THE MEANING OF BALCONY AND TERRACE WITH REFERENCE TO DEFINITION OF BUILT UP AREA DEFINED U/S. 80IB(14)(A). HOWEVER, THE DISTINCTION BETWEEN BALCONY AND TERRACE EXPLAINED BY THE HONBLE COURT WOULD BE RELEVANT IN THE FACTS OF PRESENT CASE AS WELL. 7 ITA NO S. 1779 & 1888/PUN/2013, A.Y. 2007 - 08 8. THE LD. AR HAS PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI NARESH T. WADHWANI VS. DY. COMMISSIONER OF INCOME TAX (SUPRA) TO C ONTEND THAT THE DEFINITION OF BUILT UP AREA INSERTED W.E.F. 01 - 04 - 2005 CAN BE APPLIED RETROSPECTIVELY. THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE AFORESAID CASE AFTER TAKING INTO CONSIDERATION THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF M/S CEEBROS HOTELS PRIVATE LIMITED VS. DCIT, TAX CASE (APPEAL) NO. 581 OF 2008 DECIDED ON 19.10.2012 OBSERVED : 20. WE HAVE CAREFULLY PERUSED THE JUDGEMENT OF THE HONBLE MADRAS HIGH COURT AND FIND THAT THOUGH THE HONBLE HIGH COURT WAS CONSIDERING A PROJECT APPROVED PRIOR TO 01.04.2005 YET IT HAS TAKEN INTO CONSIDERATION THE DEFINITION OF BUILT - UP AREA CONTAINED IN SECTION 80IB(14)(A) OF THE ACT, WHICH WAS INSERTED W.E.F. 01.04.2005. AS PER THE HONBLE HIGH COURT EVEN AFTER ASSUMING THAT SUCH DEFINITION W AS TO BE RETROSPECTIVELY APPLIED YET THE AREA OF OPEN TERRACE WOULD NOT FALL WITHIN THE MEANING OF THE EXPRESSION BUILT - UP AREA. THE HONBLE HIGH COURT REFERRED TO THE INDIAN STANDARD METHOD OF MEASUREMENT OF PLINTH, CARPET AND RENTABLE AREAS OF BUILDIN GS 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. THE RELEVANT DISCUSSION IN THE ORDER OF THE HONBLE HIGH COURT IS REPRODUCED HEREINAFTER : - 31. AS FAR AS THE INTRODUCTION OF DEFINITION PORTION IN SECTION 80 - IB(14) W.E.F. 01.04.2005 IS CONCERNED, EVEN ASSUMING THAT TH E DEFINITION SECTION HAS RETROSPECTIVE EFFECT, WE DO NOT THINK THAT THE DEFINITION GIVEN UNDER SECTION 80 - IB (14) WOULD IN ANY MANNER PREJUDICE THE CLAIM OF THE ASSESSEE HEREIN, FOR THE DEFINITION GIVEN UNDER SECTION 80 - IB (14) DOES NOT APPEAR TO GO AGAINS T WHAT HAS BEEN DEFINED TO INCLUDE THE MEASUREMENT OF THE PLINTH AREA OF BUILDING UNDER THE BUILDING REGULATIONS AND INDIAN STANDARD METHOD OF MEASUREMENT OF PLINTH, CARPET AND RENTABLE AREAS OF BUILDINGS AS ISSUED BY BUREAU OF INDIAN STANDARD. SINCE, CLAU SE 4.1.2 CLEARLY EXCLUDES OPEN TERRACE FOR PLINTH AREA AND WHAT IS INCLUDED IN CLAUSE 4.1.1. IS AS STATED IN CLAUSE (D), WHICH READS AS UNDER : E) IN CASE OF OPEN VERANDAH WITH PARAPATS: 1) 100 PERCENT AREAS FOR THE PORTION PROTECTED BY THE PROJECTIONS AB OVE, AND 2) 50 PERCENT, AREA FOR THE PORTION UNPROTECTED FROM ABOVE.' REVENUE DOES NOT DISPUTE THE FACT THAT THE OPEN TERRACE IS NOT A PROJECT - ION LIKE A BALCONY TO FIT IN WITH THE DEFINITION UNDER SECTION 2.4 OF INDIAN 8 ITA NO S. 1779 & 1888/PUN/2013, A.Y. 2007 - 08 STANDARD METHOD OF MEASUREMENT OF PL INTH, CARPET AND RENTABLE AREAS OF BUILDINGS AS ISSUED BY BUREAU OF INDIAN STANDARD. 32. THUS, GOING BY THE DEFINITION UNDER INDIAN STANDARD METHOD OF MEASUREMENT OF PLINTH, CARPET AND RENTABLE AREAS OF BUILDINGS, EVEN BY MAKING A REFERENCE TO THE DEFINITION OF 'BUILT - UP AREA' UNDER SUB - SECTION 14 (A) AS APPLICABLE TO THE YEAR UNDER CONSIDERATION, WE DO NOT FIND ANY JUSTIFIABLE GROUND FOR THE REVENUE TO INCLUDE THE OPEN TERRACE AS PART OF THE BUILT - UP AREA. THIS WE SAY FOR THE REASON THAT AS ALREADY POINTED OUT, SUB - SECTION 10 OF SECTION 80 - IB OF INCOME TAX ACT CONTEMPLATES GRANT OF DEDUCTION ONLY IN RESPECT OF PROJECTS, WHICH ARE APPROVED BY THE LOCAL AUTHORITY, IN WHICH EVENT, AN UNDERSTANDING THAT ONE HAS TO GIVE TO THE DEFINITION OF 'BUILT - UP ARE A' INCLUDING THE PROJECTIONS AND BALCONY MUST, NECESSARILY GO ALONG WITH THE UNDERSTANDING PLACED ON SUCH EXPRESSIONS AS PER THE RELEVANT REGULATION OF THE STATUTORY AUTHORITY UNDER THE DEVELOPMENT CONTROL RULES. IN ANY EVENT, EVEN TAKING THE DEFINITION AS GIVING A DIFFERENT MEANING, THE SAME CANNOT CONTROL THE SUBSTANTIVE PROVISION WHICH CONTEMPLATES DEDUCTION TO PROJECTS APPROVED BY THE LOCAL AUTHORITY, THE APPROVAL BEING AS PER THE REGULATIONS AND RULES OF THE LOCAL AUTHORITY. IN SUCH CIRCUMSTANCES, WE R EJECT THE CONTENTION OF THE REVENUE AND THEREBY, WE AGREE WITH THE VIEW EXPRESSED BY THE ASSESSES. 33. LEARNED SENIOR COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE UNREPORTED DECISION OF THE BOMBAY HIGH COURT IN INCOME TAX APPEAL NO.3315 OF 2010 (THE COM MISSIONER OF INCOME TAR, VS. M/S.TINNWALA INDUSTRIES), DATED 13.04.2012. A READING OF THE DECISION OF THE BOMBAY HIGH COURT SHOWS THAT THE ISSUE RAISED THEREIN RELATED TO THE ASSESSMENT YEAR 2004 - 2005. SIMILAR CONTENTION RAISED BEFORE THE COURT WAS TAKEN B EFORE THE BOMBAY HIGH COURT TOO. HOLDING THE VIEW THAT THE EXPRESSION 'BUILT - UP AREA' IN A HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY DOES NOT INCLUDE THE BALCONY AREA FOR THE PERIOD PRIOR TO 1 ST APRIL 2005, THE BOMBAY HIGH COURT HELD THAT WHEN THE LE GISLATURE HAS INTRODUCED THE DEFINITION OF ''BUILT - UP AREA' BY INCLUDING THE BALCONY AREA FROM A PARTICULAR DATE, THEN, THE SAME COULD NOT BE APPLIED RETROSPECTIVELY. 34. IN THE DECISION REPORTED IN [2012] 21 TAXMANN.COM 140 (KARNATAKA), COMMISSIONER OF IN COME TAX, CENTRAL CIRCLE VS. ANRIYA PROJECT MANAGEMENT (SERVICES) PRIVATE LIMITED, RENDERED BY KARNATAKA HIGH COURT, A SIMILAR SUCH QUESTION WAS CONSIDERED. THE KARNATAKA HIGH COURT POINTED OUT THAT PRIOR TO 01.04.2005, OPEN BALCONY AREA HAVE TO BE EXCLUDE D IN CALCULATING THE BUILT - UP AREA. THE KARNATAKA HIGH COURT FURTHER POINTED OUT AS THE PROJECT WAS APPROVED BY 14.06 - 2002 ARID THE BALCONY WARE SHOWN, BUT, WERE EXCLUDED IN THE BUILT - UP AREA, THE INCOME TAX AUTHORITY CANNOT ADD BALCONY AS BUILT - UP ARE A AND DENY THE BENEFIT TO THE ASSESSES. 9 ITA NO S. 1779 & 1888/PUN/2013, A.Y. 2007 - 08 35. THE KARNATAKA HIGH COURT FURTHER POINTED OUT THAT AS PER SECTION 80 - IB (10), THE HOUSING PROJECT MUST BE ONE APPROVED BY A LOCAL AUTHORITY. IN RESPECT OF THE APPROVAL OBTAINED PRIOR TO 01.04.2005, IF SUB - SECTION 14 (A) OF SECTION 80 - IB HAS TO BE HELD APPLICABLE, THEN, THE ASSESSES HAS TO NECESSARILY SEEK FOR A MODIFIED PLAN. ONCE, A VALID APPROVAL IS OBTAINED AND THE BUILDING IS CONSTRUCTED IN ALL RESPECTS PRIOR TO 01.04.2005, THEN, THE ASSESSES WOULD BE ENTITLED TO THE BENEFIT OF SECTION 80 - IB. THIS IS IRRESPECTIVE OF THE DATE OF SALE, THAT IS, EVEN IF IT IS SUBSEQUENT TO 01.04.2005, THE ASSESSES HAS TO HAVE THE BENEFIT OF SECTION 80 - IB. AS FAR AS THE INTRODUCTION OF DEFINITION OF 'BUILT - UP AREA' IN SUBJECTION 14 {A) OF SECTION 80 - IB, UNDER FINANCE (NO.2) ACT, 2004 IS CONCERNED, THE KARNATAKA HIGH COURT HELD THAT HAVING REGARD TO THE FACT THAT THEY CAME INTO FORCE FROM 01.04.2005, THE SAME WILL HAVE RELEVANCE TO THOSE HOUSING PROJECTS, WHICH WERE APPROVED SUBSEQUEN T TO 01.04.2005. 36. WE AGREE WITH THE VIEWS EXPRESSED IN THE UNREPORTED DECISION OF BOMBAY HIGH COURT IN INCOME TAX APPEAL. NO. 3315 OF 2010 (THE COMMISSIONER OF INCOME TAX VS. M/S.TINNWALA INDUSTRIES), DATED 13.04.2012 AND THE DECISION OF KARNATAKA HIGH COURT REPORTED IN [2012] 21 TAXMANN.COM 140 (KARNATAKA), COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE VS. ANRIYA PROJECT MANAGEMENT (SERVICES) PRIVATE LIMITED, THAT SECTION 80 - IB (14) DEFINING 'BUILT - UP AREA' WILL HAVE RELEVANCE ON AND FROM 01.04.2005. APART FROM THIS, WE HAVE ALSO HELD IN THE PRECEDING PARAGRAPHS THAT GOING BY THE SUBSTANTIVE PART OF SECTION 80 - IB (10), WHAT IS REQUIRED FOR GRANT OF DEDUCTION IS A HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY. THAT BEING THE CASE, THE DEFINITION OF 'BUILT - UP AREA', HAS TO HAVE THE SAME MEANING AS HAS BEEN GIVEN IN THE DEVELOPMENT CONTROL RULES, OTHERWISE, THE SUBSTANTIVE PART IN SECTION 80 - IB REFERRING TO THE APPROVAL BY THE LOCAL AUTHORITY BECOMES MEANINGLESS FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80 - I B (10) AND THE APPROVAL FOR THE PURPOSE OF SECTION 80 - IB HAS TO EMANATE FROM THE INCOME TAX ACT, WE DO NOT THINK THE ACT CONTEMPLATES SUCH EXERCISE ALSO BY THE REVENUE. GIVEN THE FACT THAT CONTEMPLATION OF DEDUCTION IS TO HOUSING PROJECTS APPROVED BY THE L OCAL AUTHORITY, WE HOLD THAT ONCE THE LOCAL AUTHORITY HAVE EXCLUDED OPEN TERRACE FROM THE WORKING OF BUILT - UP AREA, IT IS NOT OPEN TO THE REVENUE TO REVIEW THE APPROVAL GIVEN BY THE COMPETENT AUTHORITY TO HOLD THAT TERRACE WOULD ALSO BE INCLUDED IN THE BUI LT - UP AREA. AS ALREADY HELD THE DEFINITION ALSO DOES NOT SPEAK IN DIFFERENT LANGUAGE FROM WHAT IS GIVEN IN THE MEASUREMENT PROVISION OF BUREAU OF INDIAN STANDARD IN THE CONTEXT OF THE DEFINITION OF BALCONY IN THE INDIAN STANDARD. 37. IN THE CIRCUMSTANCES, WE HAVE NO HESITATION IN ALLOWING THE ASSESSEE'S APPEAL, BY SETTING ASIDE THE ORDER OF THE TRIBUNAL. THUS, WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION IN RESPECT OF FLATS IN THE 7 TH FLOOR, WHICH DO NOT EXCEED THE REQUIRED EXTENT AS PER SECTION 80 - IB (10)(C) THAT OPEN TERRACE AREA, CANNOT FORM PART OF THE BUILT - UP AREA. 21. NOTABLY, THE HONBLE 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 10 ITA NO S. 1779 & 1888/PUN/2013, A.Y. 2007 - 08 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 LOW ER AUTHORITIES. BE THAT AS IT MAY, THE HONBLE 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 QUE STION 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 7 TH 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 P LAN 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 GUI DED 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 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 T HE REVENUE, WHICH IS EVIDENTLY CONTRARY TO THE APPROVAL OF THE LOCAL AUTHORITY BASED ON THE RULES AND REGULATIONS COULD NOT BE SUSTAINED. CONSEQUENTLY, WE HAVE NO HESITATION IN AGREEING WITH THE ASSESSEES CONTENTION THAT OPEN TERRACE AREA, EVEN IF BE PRI VATE TERRACE, CANNOT FORM PART OF THE BUILT - UP AREA. 22. AS PER THE HONBLE 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 ALS O 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 HONBLE MADRAS HIGH COURT, WE ARE UNABLE TO UPHOLD THE STAND OF THE ASSESSING OFFICER TO INCLUDE AREA OF TERRAC E 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 11 ITA NO S. 1779 & 1888/PUN/2013, A.Y. 2007 - 08 SUCH TERRACE, EVEN IF THE SAME IS AVAILABLE EXCLUSIVELY FOR USE OF THE RESPECTIVE UNIT - HOLDERS. 9. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS REFERRED TO RULE 15.4.2 R.W. RULE 15.4.1 WHICH TALKS ABOUT PROJECTION AND BALCONY. HOWEVER, THERE IS NO REFERENCE TO THE TERM TERRACE IN SAID RULES. IN OUR CONSIDERED VIEW WHEN THERE IS NO MENTION OF TERRACE IN TH E RULES RELIED UPON BY THE COMMISSIONER OF INCOME TAX (APPEALS), THE SAME CANNOT BE READ INTO THE EXPLANATION OR THE RULES TO SAY THAT BALCONY AND PROJECTION ARE THE SAME AS TERRACE. 10. IN THE PRESENT CASE THE TERRACE WHICH IS SUBJECT MATTER OF DISPU TE IS OVER CAR PARKING AND OPEN TO THE SKY. THE CO - ORDINATE BENCH AFTER PLACING RELIANCE ON THE DECISION OF HONBLE MADRAS HIGH COURT HAS HELD THAT THE AREA OF TERRACE IS NOT TO BE INCLUDED WHILE COMPUTING BUILT UP AREA. THUS, IN VIEW OF THE FACTS OF T HE CASE AND THE DECISION REFERRED ABOVE , WE ARE OF CONSIDERED VIEW THAT THE AREA OF TERRACE IS NOT TO BE INCLUDED IN THE TOTAL BUILT UP AREA. AFTER EXCLUDING THE AREA OF TERRACE THE BUILT UP AREA OF HOUSE IN QUESTION IS LESS THAN 1500 SQ. FT. HENCE, THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION U/S. 80IB(10) IN RESPECT OF ROW HOUSE AS WELL. ACCORDINGLY, THE SOLITARY ISSUE RAISED BY THE ASSESSEE IN APPEAL IS ALLOWED. RESULTANTLY, THE APPEAL OF ASSESSEE IS ALLOWED. ITA NO. 1888/PUN/2013 (REVENUES AP PEAL) 1 1 . IN APPEAL REVENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN GRANTING PRO - RATA DEDUCTION U/S. 80IB(10) TO THE ELIGIBLE UNITS OF THE HOUSING PROJECT. GRANTING OF PROPORTIONATE DEDUCTION U/S. 80IB(10) ON THE ELIGIBLE UNI TS OF A HOUSING PROJECT IS NO MORE RES - 12 ITA NO S. 1779 & 1888/PUN/2013, A.Y. 2007 - 08 INTEGRA. THE HONBLE JURISDICTIONAL HIGH COURT IN VARIOUS CASES HAS AFFIRMED THE PRINCIPLE OF GRANTING PRO - RATA DEDUCTION U/S. 80IB(10). 12. BE THAT AS IT MAY , THE ONLY RESIDENTIAL UNIT THAT WAS DENIED THE BENEFIT OF DEDUCTION U/S. 80IB(10) WAS ROW HOUSE NEAR BUILDING H. THE ASSESSEE IN APPEAL ASSAILED THE DENIAL OF DEDUCTION ON THE SAID HOUSE. SINCE, WE HAVE ACCEPTED THE APPEAL OF ASSESSEE AND ALLOWED BENEFIT OF DEDUCTION U/S. 80IB(10) ON THE ONLY ROW HOUSE IN TH E HOUSING PROJECT, WITH THAT, THE ENTIRE HOUSE PROJECT SHYAMA HERITAGE QUALIFIES FOR DEDUCTION U/S. 80IB(10). THEREFORE, THE APPEAL OF DEPARTMENT HAS BECOME INFRUCTUOUS AND IS DISMISSED , AS SUCH . 13. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 15 TH DAY OF NOVEMBER, 2017 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 15 TH NOVEMBER, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - V, PUNE 4. / THE CIT - V, PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE