2012 (3) TMI 615 - HC - Income Tax

Built up Area - Deduction u/s 80IB - Assessee is engaged in construction and real estate business. In the year 2002 they constructed some flats separate sale deeds were executed in respect of the very same purchaser. Admittedly all these flat totally measured less than 1500 sq. ft. per unit. Assessee claimed 100% benefit of deduction u/s 80IB(10). AO denied the said benefit on the ground that the main flats exceeded the permissible limit of 1500sq. ft. Also separate sale deeds cannot be executed in respect of the very same purchaser - HELD THAT - Space occupied by the balcony cannot be taken into consideration as the balcony area was not added to the flats for the purpose of finding out the total built up area prior to 01.04.2005. Similarly prior to 19.08.2009 there was no prohibition for a person purchasing two flats. AO shall keep in mind the statutory provisions and then pass appropriate orders. Matter restored back.

Summary

Issues:
Challenge to order granting exemption under Section 80IB(10) of the Income Tax Act, 1961 based on the size of constructed flats.

Analysis:
The case involved an appeal by the revenue challenging the Tribunal's order granting exemption under Section 80IB(10) of the Income Tax Act, 1961. The assessee, engaged in construction and real estate business, undertook projects named 'SJR Eastwood' and 'SJR residential'. The revenue denied the exemption claiming that the main flats exceeded the permissible limit of 1500 sq. ft. required for the benefit under Section 80IB(10). The Commissioner of Income Tax (Appeals) upheld the denial, leading the assessee to appeal to the Tribunal.

The Tribunal ruled that the assessee would not lose the benefit entirely due to some flats exceeding 1500 sq. ft. Only the flats exceeding the limit would be excluded from the benefit. Consequently, the matter was remitted back to the Assessing Authority for reconsideration. The revenue, aggrieved by this decision, appealed.

The revenue contended that any flat exceeding 1500 sq. ft. would disqualify the assessee from the exemption under Section 80IB(10), regardless of the number of flats violating the limit. On the contrary, the assessee argued that the balcony area was not included in the built-up area calculation before a certain date. Additionally, the mezzanine floors were registered under separate sale deeds, each not exceeding 1500 sq. ft., justifying the exemption.

The Court noted that before a specific date, the balcony area was not considered in the built-up area calculation. Similarly, prior to another date, there was no prohibition on purchasing two flats. The Tribunal's decision to allow proportionate benefit and remand the matter was upheld, emphasizing the correct interpretation of the legal position.

In conclusion, the Court ruled in favor of the assessee, emphasizing adherence to statutory provisions and legal interpretations. The Assessing Authority was directed to consider the Court's interpretation and pass appropriate orders in accordance with the law.