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2014 (4) TMI 122 - HC - Income TaxClaim of deduction u/s 80IB(10) of the Act Scope of the term Built up area - Whether the rear courtyard enclosed by walls of a residential unit could be included as built-up area of the residential unit - Held that - The definition of the words 'built-up area' was inserted by the Finance Act of 2004 w.e.f. 01.04.2005 much before the plans were approved - The built-up area would mean the inner measurements of the residential unit at the floor level including the projections and balconies as increased by the thickness of the wall but does not include the common area shared with other residential unit - the built-up area is to be worked out from the wall of the residential unit The area which is sought to be included by the Tribunal to calculate the built up area is the rear courtyard - in order to include an area to be a built up area to avail of deduction u/s 80-IB(10) of the Act, something has to be built on in order that such area can be included for calculating the built-up area. Relying upon Commissioner of Income Tax V/s G.R. Developers 2012 (7) TMI 91 - KARNATAKA HIGH COURT - the area of courtyard cannot be included to calculate the built-up area in terms of Section 80- IB(10) of the Act the Tribunal was not justified to come to the conclusion that the area of the courtyard is to be included to calculate the built-up area and thereby holding that the residential unit was more than 1500 square feet which would disentitle the appellant to claim such deduction the Tribunal has misconstrued the provisions of Income Tax Act and the material on record to deny the benefit of deduction to the appellant in terms of Section 80-IB(10) of the Act Decided in favour of Assessee.
Issues Involved:
1. Inclusion of rear courtyard enclosed by walls as built-up area of a residential unit. 2. Authority of the Tribunal to measure and include the courtyard in the built-up area. Detailed Analysis: Issue 1: Inclusion of Rear Courtyard as Built-Up Area The primary question was whether the rear courtyard enclosed by walls should be included as built-up area under Section 80-IB(10) of the Income Tax Act. The appellant argued that the courtyard, being open to the sky and without any masonry construction, does not qualify as built-up area. The definition of "built-up area" under Section 80-IB(14)(a) includes the inner measurements of the residential unit at floor level, including projections and balconies, but excludes common areas shared with other residential units. The court noted that the rear courtyard was an open piece of land enclosed by a compound wall and without any construction, thus it should not be included in the built-up area. The court also referenced definitions from the Oxford dictionary and other legal dictionaries to support this interpretation, concluding that built-up area requires some form of construction. Issue 2: Authority of the Tribunal to Measure and Include the Courtyard The second issue was whether the Tribunal could measure and include the courtyard in the built-up area, which was not originally part of the dispute. The appellant contended that the Tribunal's approach was erroneous and that the project was approved before the definition of built-up area was amended in 2005. The Tribunal's decision to include the courtyard was based on an inspection and the conclusion that the residential unit exceeded 1500 square feet. However, the court found that the Tribunal had misconstrued the provisions of the Income Tax Act and the material on record. The court emphasized that the built-up area should be calculated based on the inner measurements of the residential unit, excluding open courtyards. Conclusion: The court allowed the appeal, quashing the Tribunal's judgment. It held that the rear courtyard should not be included in the built-up area, and the appellant was entitled to the deduction under Section 80-IB(10) of the Income Tax Act. The court did not find it necessary to address the second substantial question of law due to the findings on the first issue. The appeal was disposed of accordingly.
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