2017 (5) TMI 75 - AT - Income Tax

Deduction u/s 80-IB(10) of the Income-tax Act, 1961 - denial on the ground that the floor space index exceeds 1500 sq.ft. - according to Revenue the private open terrace is nothing but an extension of floor space area for exclusive use of residential units - whether the private terrace attached with residential unit would form part of built-up area for the purpose of computing deduction under Section 80-IB(10)? - Held that - it is necessary to examine the housing project approved by the local body. In other words, whether the so-called private open terrace said to be attached with private residential unit would form part of built-up area as per housing project or it was excluded from the approval granted by local authority. Since the copy of building approval was not available on record, this Tribunal is of the considered opinion that the matter needs to be reconsidered - appeal allowed by way of remand.

Summary

Issues:
- Deduction claimed under Section 80-IB(10) of the Income-tax Act, 1961.

Analysis:
1. The judgment pertains to three appeals by the Revenue against the Commissioner of Income Tax (Appeals) orders for assessment years 2010-11, 2011-12, and 2012-13, focusing on the deduction claimed under Section 80-IB(10) of the Act.

2. The main contention raised by the Departmental Representative was that the private open terrace constructed by the assessee for residential units should be considered as a built-up area, leading to the disqualification of the assessee for the deduction under Section 80-IB(10) due to the floor space index exceeding 1500 sq.ft.

3. The Departmental Representative relied on the judgment of the Madras High Court in CIT v. Mahalakshmi Housing, arguing that the open terrace should not be excluded from the built-up area. Additionally, reference was made to Ceebros Hotels Pvt. Ltd. v. DCIT to differentiate between open and private terrace areas.

4. Conversely, the representative for the assessee contended that the terrace area should be excluded from the built-up area calculation, citing the judgments in Ceebros Hotels Pvt. Ltd. and Mahalakshmi Housing by the Madras High Court.

5. The Tribunal analyzed the arguments and referred to the Madras High Court judgment in Ceebros Hotels Pvt. Ltd., emphasizing that areas excluded by the local authority from the built-up area should not be reviewed by the Revenue. Since the building approval details were unavailable, the matter required reconsideration.

6. The Tribunal noted that the private open terrace was accessible only from inside the residential unit, not a common area, and directed a fresh examination by the Assessing Officer based on the building approval to determine if the terrace formed part of the built-up area.

7. Consequently, the Tribunal allowed all the appeals filed by the Revenue for statistical purposes, setting aside the lower authorities' orders and instructing a reassessment by the Assessing Officer in line with the local authority's approval, ensuring a fair opportunity for the assessee.

This detailed analysis of the judgment highlights the key arguments, legal references, and the Tribunal's decision, providing a comprehensive understanding of the case regarding the deduction claimed under Section 80-IB(10) of the Income-tax Act, 1961.