DCIT, CHENNAI V. Acestar Properties Pvt Ltd., CHENNAI

ITA 860/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4722 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 04-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Competent authority

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !.. # $%, ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NOS.858, 859 & 860/MDS/2016 + ,+ / ASSESSMENT YEARS : 2010-11, 2011-12 & 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1), CHENNAI - 600 034. V. M/S ACESTAR PROPERTIES PVT. LTD., NO.12, SOUTH MADA STREET, SRINAGAR COLONY, SAIDAPET, CHENNAI - 600 015. PAN : AAFCA 7237 B (.// APPELLANT) (01.// RESPONDENT) ./ 2 3 / APPELLANT BY : SHRI SUPRIYO PAL, JCIT 01./ 2 3 / RESPONDENT BY : SH. B. RAMAKRISHNAN, CA # 2 4' / DATE OF HEARING : 13.03.2017 56, 2 4' / DATE OF PRONOUNCEMENT : 28.04.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: ALL THE THREE APPEALS OF THE REVENUE ARE DIRECTE D AGAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI, DATED 22.1.2016 AND PERTAIN T O ASSESSMENT YEARS 2010-11, 2011-12 AND 2012-13. SINCE COMMON I SSUE ARISES 2 I.T.A. NOS.858 TO 860/MDS/16 FOR CONSIDERATION IN ALL THESE APPEALS, WE HEARD TH ESE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON O RDER. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DEDUC TION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IB(10) OF THE INCO ME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI SUPRIYO PAL, THE LD. DEPARTMENTAL REPRESENT ATIVE, SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSIN ESS OF PROMOTING HOUSING PROJECTS. THE ASSESSEE HAS CONST RUCTED NEARLY 426 RESIDENTIAL UNITS. ALL THE RESIDENTIAL UNITS I N THE FIRST FLOOR HAVE PRIVATE OPEN TERRACE RANGING FROM 100 TO 700 SQ.FT. ACCORDING TO THE LD. D.R., THE PRIVATE OPEN TERRACE IS FOR EXCLUSIVE USE OF ATTACHED RESIDENTIAL UNITS. THE ACCESS TO PRIVATE OPEN TERR ACE IS ONLY FROM RESIDENTIAL UNITS AS OPENING DOORS PROVIDED ONLY FR OM RESIDENTIAL UNITS LIKE FROM BEDROOM, HALLS, ETC. THE PRIVATE O PEN TERRACE WAS SOLD TO THE OWNERS FOR THEIR EXCLUSIVE USE, THEREFO RE, ACCORDING TO THE LD. D.R., THE PRIVATE OPEN TERRACE IS NOTHING B UT A BUILT-UP AREA AS PROVIDED IN SECTION 80-IB(10) OF THE ACT. ACCOR DING TO THE LD. D.R., IT IS NOTHING BUT AN EXTENSION OF FLOOR SPACE AREA FOR EXCLUSIVE USE OF RESIDENTIAL UNITS. THEREFORE, THE FLOOR SPA CE INDEX EXCEEDS 3 I.T.A. NOS.858 TO 860/MDS/16 1500 SQ.FT., HENCE, THE ASSESSEE IS NOT ELIGIBLE FO R DEDUCTION UNDER SECTION 80-IB(10) OF THE ACT. 4. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) BY PLAC ING RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN CIT V. MAHALAK SHMI HOUSING (2014) 41 TAXMANN.COM 146, A COPY OF WHICH IS AVAIL ABLE AT PAGE 24 OF THE PAPER-BOOK, ALLOWED THE CLAIM OF THE ASSESSE E. REFERRING TO THIS JUDGMENT OF MADRAS HIGH COURT, THE LD. D.R. SU BMITTED THAT THE MADRAS HIGH COURT BY FOLLOWING ITS EARLIER ORDER IN CEEBROS HOTELS PVT. LTD. V. DCIT IN TAX CASE (APPEAL) NO.581 OF 20 08 DATED 19.10.2012, FOUND THAT OPEN TERRACE CANNOT FORM PAR T OF BUILT-UP AREA. ACCORDING TO THE LD. D.R., IT IS NOT OPEN TE RRACE AS CLAIMED BY THE ASSESSEE. IT IS AN EXTENDED PORTION OF THE RES IDENTIAL UNIT. THE ASSESSEE HAS CONSTRUCTED FOUR-STORIED BUILDING. IN THE FIRST FLOOR, THE PORTION OF BUILDING WAS EXTENDED FOR THE EXCLUSIVE USE OF PARTICULAR RESIDENTIAL UNIT. IT IS NOT OPEN TERRACE TO ALL TH E RESIDENTS. ACCORDING TO THE LD. D.R., OTHER THAN THE PERSON TO WHOM THE RESIDENTIAL UNIT WAS ALLOTTED, NO ONE CAN ACCESS THAT EXTENDED AREA. THE DOOR TO THE PRIVATE OPEN TERRACE WAS ATTACHED WITH THE BEDR OOM OF THE RESIDENTIAL UNIT ALLOTTED TO THE INDIVIDUAL, THEREF ORE, IT CANNOT BE 4 I.T.A. NOS.858 TO 860/MDS/16 COMPARED AS OPEN TERRACE AREA, WHICH WAS NOT THE SU BJECT MATTER FOR CONSIDERATION IN MAHALAKSHMI HOUSING (SUPRA). ACCORDING TO THE LD. D.R., WHAT WAS CONSTRUCTED BY THE ASSESSEE IS A PRIVATE TERRACE AND NOT OPEN TERRACE. THEREFORE, THE JUDGMENT OF M ADRAS HIGH COURT IN MALAKSHMI HOUSING (SUPRA) MAY NOT BE APPLI CABLE. 5. REFERRING TO THE JUDGMENT OF MADRAS HIGH COURT I N CEEBROS HOTELS PVT. LTD. (SUPRA), A COPY OF WHICH IS AVAILA BLE AT PAGE 8 OF PAPER-BOOK, THE LD. D.R. SUBMITTED THAT THE QUESTIO N AROSE FOR CONSIDERATION BEFORE THE HIGH COURT WAS WHETHER THE OPEN TERRACE OF 7 TH FLOOR IS WITHIN THE MEANING OF BUILT-UP AREA? T HE MADRAS HIGH COURT AFTER CONSIDERING THE UNREPORTED JUDGMEN T OF BOMBAY HIGH COURT IN CIT V. M/S TINNWALA INDUSTRIES IN TAX APPEAL NO.3315 OF 2010 DATED 13.04.2012 AND THE JUDGMENT OF KARNAT AKA HIGH COURT IN CIT V. ANRIYA PROJECT MANAGEMENT (SERVICES ) PVT. LTD. (2012) 21 TAXMANN.COM 140, FOUND THAT THE WORD BUI LT-UP AREA HAS TO BE GIVEN THE SAME MEANING AS IN THE DEVELOPM ENT CONTROL RULES. THE HIGH COURT FOUND THAT THE LOCAL AUTHORI TY HAS EXCLUDED OPEN TERRACE AREA FROM WORKING OF BUILT-UP AREA. T HEREFORE, IT IS NOT OPEN TO THE REVENUE TO REVIEW THE APPROVAL GIVEN BY THE COMPETENT AUTHORITY TO HOLD THAT TERRACE ALSO INCLUDED IN THE BUILT-UP AREA. IN 5 I.T.A. NOS.858 TO 860/MDS/16 VIEW OF THIS JUDGMENT OF MADRAS HIGH COURT, ACCORDI NG TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 6. ON THE CONTRARY, SH. B. RAMAKRISHNAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE BUILT- UP RESIDENTIAL APARTMENTS. NO PART OF RESIDENTIAL UNIT EXCEEDED 1500 SQ.FT. THE AREA IS PROVIDED AT PAGES 1 TO 7 O F THE PAPER-BOOK. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER BY TAKING INTO CONSIDERATION THE TERRACE AREA, FOUND THAT IT EXCEEDED 1500 SQ.FT.. THE SALEABLE AREA INCLUDED THE COMMON AREA ALSO. THE PLINTH AREA OF EACH RESIDENTIAL UNIT IN ALL THE UNI TS IS LESS THAN 1500 SQ.FT. THEREFORE, ACCORDING TO THE LD. REPRESENTAT IVE, IT CANNOT BE SAID THAT THE ASSESSEE HAS CONSTRUCTED RESIDENTIAL UNIT EXCEEDING 1500 SQ.FT. MOREOVER, IN VIEW OF THE JUDGMENT OF MADRAS HIGH COURT IN CEEBROS HOTELS PVT. LTD. (SUPRA) AND MAHAL AKSHMI HOUSING (SUPRA), OPEN TERRACE HAS TO BE EXCLUDED FROM BUILT -UP AREA. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE QUESTION 6 I.T.A. NOS.858 TO 860/MDS/16 ARISES FOR CONSIDERATION IS WHETHER THE PRIVATE TER RACE ATTACHED WITH RESIDENTIAL UNIT WOULD FORM PART OF BUILT-UP AREA F OR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80-IB(10)? BY PL ACING RELIANCE IN THE JUDGMENT OF MADRAS HIGH COURT IN CEEBROS HOT ELS PVT. LTD. (SUPRA) AND IN MAHALAKSHMI HOUSING (SUPRA), THE ASS ESSEE CLAIMS THAT OPEN TERRACE HAS TO BE EXCLUDED AND IT CANNOT BE TREATED AS BUILT-UP AREA. 8. WE HAVE CAREFULLY GONE THROUGH THE JUDGMENT OF M ADRAS HIGH COURT IN CEEBROS HOTELS PVT. LTD. (SUPRA), A C OPY OF WHICH IS AVAILABLE AT PAGE 8 OF THE PAPER-BOOK. THE MADRAS HIGH COURT FOUND THAT WHILE CONTEMPLATING DEDUCTION UNDER SECT ION 80-IB(10) OF THE ACT TO A HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY, THE AREA EXCLUDED FROM THE WORKING OF BUILT-UP AREA BY THE LOCAL AUTHORITY, CANNOT BE TAKEN AS BUILT-UP AREA. IN FA CT, THE MADRAS HIGH COURT HAS OBSERVED AS FOLLOWS AT PARA 36 OF ITS JUD GMENT:- GIVEN THE FACT THAT CONTEMPLATION OF DEDUCTION IS T O HOUSING PROJECTS APPROVED BY THE LOCAL AUTHORITY, W E HOLD THAT ONCE THE LOCAL AUTHORITY HAVE EXCLUDED OPE N TERRACE FROM THE WORKING OF BUILT-UP AREA, IT IS NO T OPEN TO THE REVENUE TO REVIEW THE APPROVAL GIVEN BY THE COMPETENT AUTHORITY TO HOLD THAT TERRACE WOULD ALSO BE INCLUDED IN THE BUILT-UP AREA. AS ALREADY HELD THE DEFINITION ALSO DOES NOT SPEAK IN DIFFERENT LANGUAG E FROM WHAT IS GIVEN IN THE MEASUREMENT PROVISION OF BUREAU OF 7 I.T.A. NOS.858 TO 860/MDS/16 INDIAN STANDARDS IN THE CONTEXT OF THE DEFINITION OF BALCONY IN THE INDIAN STANDARD. 9. IN VIEW OF THE ABOVE JUDGMENT OF MADRAS HIGH COU RT, IT IS NECESSARY TO EXAMINE THE HOUSING PROJECT APPROVED B Y THE LOCAL BODY. IN OTHER WORDS, WHETHER THE SO-CALLED PRIVAT E OPEN TERRACE SAID TO BE ATTACHED WITH PRIVATE RESIDENTIAL UNIT W OULD FORM PART OF BUILT-UP AREA AS PER HOUSING PROJECT OR IT WAS EXCL UDED FROM THE APPROVAL GRANTED BY LOCAL AUTHORITY. SINCE THE COP Y OF BUILDING APPROVAL WAS NOT AVAILABLE ON RECORD, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECO NSIDERED. 10. MOREOVER, FROM THE ORDER OF THE ASSESSING OFFIC ER IT APPEARS THAT IN EACH FLOOR THERE IS A PROJECTION, WHICH WAS TERMED AS PRIVATE OPEN TERRACE. THE ENTRY TO SUCH OPEN TERRACE IS ONLY FROM INSIDE THE RESIDENTIAL UNIT. IT IS NOT OPEN TO OTHER RESI DENTS TO ENTER THAT PLACE. THEREFORE, IT IS NOT A COMMON AREA LIKE OPE N TERRACE. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSIDERED OP INION THAT THE MATTER NEEDS TO BE RE-EXAMINED AND BRING ON RECORD WHETHER THE SO-CALLED PRIVATE OPEN TERRACE FORMS PART OF BUILT- UP AREA IN THE APPROVAL GIVEN BY LOCAL AUTHORITY OR NOT. SINCE TH E APPROVAL OF LOCAL AUTHORITY IS NOT AVAILABLE ON RECORD, THE MATTER NE EDS TO BE RECONSIDERED. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE 8 I.T.A. NOS.858 TO 860/MDS/16 SET ASIDE. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AFRESH IN THE LIGHT OF THE APPROVAL GRANTED BY THE LOCAL A UTHORITY TO THE HOUSING PROJECT, WHICH SHALL BE BROUGHT ON RECORD T O ASCERTAIN WHETHER THE SO-CALLED PRIVATE OPEN TERRACE IS PART OF BUILT-UP AREA OR NOT. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MA TTER AFRESH, IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPO RTUNITY TO THE ASSESSEE. 11. IN THE RESULT, ALL THE APPEALS FILED BY THE REV ENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 28 TH APRIL, 2017 AT CHENNAI. 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