CHANDRASHEKAR GHANSHYAMDAS GUPTA HUF, BHIWANDI V. ITO WD 1(3), MUMBAI

ITA 6860/MUM/2010

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9237 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 18-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-10-2010
• Court: TRIBUNAL
• Department Lawyers: N PADMANABHAN

Judgement Text

. , , IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO. 6860 / MUM/20 1 0 ( / ASSESSMENT YEAR : 200 7 - 0 8 ) CHANDRASHEKAR GHANSHYAMDAS GUPTA HUF, LALIT M.JAIN & CO., 2 ND FLOOR, SHANKHESHWAR PLAZA, 309, TELIPADA, THANA ROAD, BHIWANDI - 421302 VS. ITO WARD - 1(3), THANE ./ ./ PAN/ GIR NO. : A A A HG 5669 P ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI K.GOPAL /REVENUE BY : SHRI N.PADMANABHAN / DATE OF HEARING : 2 7 /0 3 /2015 / DATE OF PRONOUNCEMENT 27 / 03/2015 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST CIT(A) DATED 30 - 7 - 2010 FOR THE ASSESSMENT YEAR 2007 - 08, IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE ACT. 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IB(10) BY TAKING THE BALCONY AS PART OF AREA OF FLAT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A BUILDER & DEVELOPER AND DURING THE Y EAR UNDER CONSIDERATION HAS CONSTRUCTED A HOUSING PROJECT HAVING TWO ITA NO. 6860 /1 0 2 BUILDINGS AT VILLAGE KAMATGHAR IN BHIWANDI TALUKA AND DECLARED A TOTAL TURNOVER OF RS.44,99,100/ - ON WHICH NET PROFIT OF RS.19,82,284/ - HAS BEEN DECLARED AND ON HIS THE NET PROFIT DEDUCTI ON U/S.80IB(10) OF THE I.T.ACT, 1961 HAS BEEN CLAIMED. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO FOUND THAT ASSESSEE HAS VIOLATED PROVISIONS OF SECTION 80IB(10)(C) BY CONSTRUCTING RESIDENTIAL UNIT HAVING BUILT UP AREA OF 1168 SQ.FT. WHEREAS IT SHOUL D NOT BE MORE THAN 1000 SQ.FT. 4. THE CONTENTION OF THE ASSESSEE WAS THAT THE BALCONY AREA IS NOT TO BE INCLUDED IN THE COVERED AREA IN SO FAR AS CLAUSE (C) WITH REGARD TO METHOD OF MEASUREMENT OF AREA OF THE FLAT HAD BROUGHT INTO THE STATUE BOOK ONLY BY AMENDMENT BY THE FINANCE ACT, 2004, WHEREIN W.E.F. ASSESSMENT YEAR 2005 - 06, METHOD OF MEASUREMENT OF AREA WAS PRONOUNCED. SINCE IN THE INSTANT CASE BUILDING PLAN WAS APPROVED PRIOR TO THE AMENDMENT BROUGHT IN FORCE W.E.F. 1 ST APRIL, 2005, THEREFORE, AMEND ED PROVISIONS ARE NOT APPLICABLE TO THE ASSESSEE. 5. FOR THIS PURPOSE, RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF HAPPY HOMES ENTERPRISES, ORDER DATED 19 - 9 - 2014, WHEREIN THE HONBLE HIGH COURT OBSERVED AS UNDER : - 22. IT WOULD BE IMPORTANT TO NOTE ANOTHER AMENDMENT THAT WAS BROUGHT ABOUT BY FINANCE (NO.2) ACT, 2004 TO SUB - SECTION (14) OF SECTION 80 - IB, W.E.F. 1ST APRIL, 2005. SECTION 80 - IB(14) WAS ALSO AMENDED BY THE SAME FINANCE (NO.2) ACT, 2004 AND FOR T HE FIRST TIME UNDER CLAUSE (A) THEREOF, THE WORDS BUILT - UP AREA WERE DEFINED. SECTION 80 - IB(14)(A) READS THUS: - (14) FOR THE PURPOSES OF THIS SECTION, (A) BUILT - UP AREA MEANS THE INNER MEASUREMENTS OF THE RESIDENTIAL UNIT AT THE FLOOR LEVEL, INCLUDIN G THE PROJECTIONS AND BALCONIES, AS INCREASED BY THE THICKNESS OF THE WALLS BUT DOES NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS; 23. PRIOR TO INSERTION OF SECTION 80 - IB(14)(A), IN MANY OF THE RULES AND REGULATIONS OF THE LOCAL AUTHOR ITY APPROVING THE HOUSING PROJECT, BUILT - UP AREA DID NOT INCLUDE PROJECTIONS AND BALCONIES. PROBABLY, ITA NO. 6860 /1 0 3 TAKING ADVANTAGE OF THIS FACT, BUILDERS PROVIDED LARGE BALCONIES AND PROJECTIONS MAKING THE RESIDENTIAL UNITS FAR BIGGER THAN AS STIPULATED IN SECTION 8 0 - IB(10), AND YET CLAIMED THE DEDUCTION UNDER THE SAID PROVISION. TO PLUG THIS LACUNA, CLAUSE (A) WAS INSERTED IN SECTION 80 - IB(14) DEFINING THE WORDS BUILT - UP AREA TO MEAN 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 DID NOT INCLUDE THE COMMON AREAS SHARED WITH OTHER RESIDENTIAL UNITS. THE REASON WE ARE REFERRING TO THIS PROVISION IS BECAUSE IT TOO WAS BROUGHT ABOUT FOR THE FIRST TIME W.E.F. 1ST APRIL, 2005 AND THE KARNATAKA HIGH COURT HAD THE OCCASION TO CONSIDER WHETHER IT WOULD APPLY TO HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY BEFORE 31ST MARCH, 2005. 6. IN VIEW OF THE ABOVE, AS PER LD. AR IT IS CLEAR THAT IN RESPECT OF BUILDING PLA N APPROVED BY THE LOCAL AUTHORITY PRIOR TO 31 - 3 - 2005, WHILE MEASURING THE INNER AREA OF THE FLAT, THE AMENDED PROVISION BROUGHT INTO THE STATUTE BOOK BY FINANCE ACT, 2004 W.E.F. 2005 - 06 IS NOT APPLICABLE. 7. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR EXAMINING ASSESSEES ELIGIBILITY OF CLAIM OF DEDUCTION U/S.80IB(10) IN TERMS OF DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF HAPPY HOMES ENTERPRISES (SUPRA). WE DIRECT ACCORDINGLY. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 27 /03/ 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 27 /03 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT ITA NO. 6860 /1 0 4 / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//