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2012 (12) TMI 361 - AT - Income TaxDeduction u/s 80IB (10) - AO denied on the ground that the commercial area in the project is more than 2000 sq.ft.- Built up area of some of the flats is more than 1500 sq.ft Held that - Assessee contended that after excluding the balcony/terrace the total built up area of none of the flats exceeds 1500 sq.ft. Whereas AO argued that some of the residential units have a built up area exceeding 1500 sq.ft. even when the terrace area is excluded. Therefore, Issue needs fresh adjudication and decides on the basis that total built up area of flats excluding the balcony/terrace area, not exceeds 1500 sq.ft as decide in case of Prime Properties (2012 - TMI - 217271 - ITAT, PUNE). Issue remand back to AO.
Issues Involved:
1. Disallowance of deduction under section 80IB(10) due to excess built-up area of shops. 2. Disallowance of deduction under section 80IB(10) due to excess built-up area of Flat No. 502. 3. Disallowance of deduction under section 80IB(10) due to excess built-up area of row houses including roof terraces. 4. Disallowance of deduction under section 80IB(10) due to excess built-up area of specific row houses excluding roof terraces. 5. Pro-rata claim under section 80IB(10) for the eligible portion of the housing project. Issue-wise Detailed Analysis: 1. Disallowance of deduction under section 80IB(10) due to excess built-up area of shops: The Assessing Officer (AO) disallowed the deduction under section 80IB(10) because the commercial area in the housing project "NISARGA CITY" exceeded 2000 sq.ft. The CIT(A) upheld this disallowance, referencing the amendment effective from assessment year 2005-06, which imposed a restriction on commercial area to 5% of the built-up area or 2000 sq.ft., whichever is lower. However, the Tribunal referred to the decision of the Bombay High Court in Brahma Associates, which clarified that for projects approved before 01-04-2005, the commercial area limit as per the Development Control (DC) Rules/Regulations applies. Since the project was approved on 20-10-2003, the Tribunal held that the commercial area limit under the DC Rules/Regulations should be considered, and therefore, the deduction under section 80IB(10) is allowable. 2. Disallowance of deduction under section 80IB(10) due to excess built-up area of Flat No. 502: The AO disallowed the deduction because the built-up area of Flat No. 502 exceeded 1500 sq.ft. The CIT(A) upheld this disallowance, including the terrace area in the built-up area calculation. The Tribunal, however, referred to the decision in Prime Properties, which held that the definition of "built-up area" including projections and balconies under section 80IB(14)(a) applies only to projects approved after 01-04-2005. Since the project was approved before this date, the Tribunal directed the AO to verify if the built-up area excluding balconies/terraces exceeds 1500 sq.ft. If not, the deduction under section 80IB(10) should be allowed. 3. Disallowance of deduction under section 80IB(10) due to excess built-up area of row houses including roof terraces: The AO disallowed the deduction because the built-up area of all row houses, including roof terraces, exceeded 1500 sq.ft. The CIT(A) upheld this disallowance. The Tribunal, referencing the decision in Prime Properties, directed the AO to verify the built-up area excluding balconies/terraces. If the built-up area excluding these areas does not exceed 1500 sq.ft., the deduction under section 80IB(10) should be allowed. 4. Disallowance of deduction under section 80IB(10) due to excess built-up area of specific row houses excluding roof terraces: The AO disallowed the deduction because the built-up area of row houses No. 1 to 8 and 25 to 31 exceeded 1500 sq.ft. even without considering the roof terraces. The CIT(A) upheld this disallowance. The Tribunal directed the AO to verify the built-up area excluding balconies/terraces. If the built-up area excluding these areas does not exceed 1500 sq.ft., the deduction under section 80IB(10) should be allowed. 5. Pro-rata claim under section 80IB(10) for the eligible portion of the housing project: The assessee argued for a pro-rata deduction under section 80IB(10) for the eligible portion of the housing project. The Tribunal did not specifically address this issue in detail but directed the AO to verify the built-up areas as per the above directions. If the conditions are met, the deduction under section 80IB(10) should be allowed accordingly. Conclusion: The Tribunal restored the matter to the file of the AO for verification of the built-up areas excluding balconies/terraces. If the built-up areas meet the conditions under section 80IB(10) as interpreted in light of the relevant case laws, the deduction should be allowed. Both appeals filed by the assessee were allowed for statistical purposes.
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