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2017 (11) TMI 1212 - AT - Income TaxBenefit of deduction u/s. 80IB(10) - denial of claim in respect of aforesaid row house on the ground that built up area of the said house including terrace is more than 1500 sq. ft. - deduction u/s. 80IB(10) on pro-rata basis in respect of eligible units - Held that - In the present case the terrace which is subject matter of dispute is over car parking and open to the sky. The Co-ordinate Bench in the case of Shri Naresh T. Wadhwani Vs. DCIT 2014 (11) TMI 689 - ITAT PUNE has held that the area of terrace is not to be included while computing built up area . Thus, in view of the facts of the case and the decision referred above, we are of considered view that the area of terrace is not to be included in the total built up area. After excluding the area of terrace the built up area of house in question is less than 1500 sq. ft. Hence, the assessee is eligible for claiming deduction u/s. 80IB(10) in respect of row house as well. Accordingly, the solitary issue raised by the assessee in appeal is allowed. Resultantly, the appeal of assessee is allowed.
Issues Involved:
1. Denial of benefit of deduction u/s. 80IB(10) for a Single Row House in the housing project due to built-up area exceeding 1500 sq. ft. 2. Granting of pro-rata deduction u/s. 80IB(10) for eligible units by the Commissioner of Income Tax (Appeals). Detailed Analysis: Issue 1: Denial of Deduction u/s. 80IB(10) for Single Row House The assessee appealed against the denial of deduction u/s. 80IB(10) for a Single Row House in the housing project "Shyama Heritage" on the grounds that the built-up area, including the terrace, exceeded 1500 sq. ft. The Departmental Valuation Officer (DVO) measured the built-up area as 1537.21 sq. ft., including the terrace, which led to the rejection of the deduction claim. The assessee argued that the project was approved before 31-03-2005, and the definition of 'built-up area' was introduced by Finance (No. 2) Act, 2004, effective from 01-04-2005. The assessee contended that the terrace area should not be included in the built-up area calculation, citing the decision of the Pune Bench of the Tribunal in the case of Shri Naresh T. Wadhwani Vs. Dy. Commissioner of Income Tax. The Tribunal held that the area of the terrace should not be included while determining the built-up area of the residential unit. The Tribunal referred to the Hon’ble Gujarat High Court's decision in Commissioner of Income Tax Vs. Amaltas Associates, which distinguished between a terrace and a balcony, stating that a terrace is not a projection and should not be included in the built-up area. The Tribunal concluded that the area of the terrace should not be included in the built-up area, thus making the built-up area of the row house less than 1500 sq. ft. Consequently, the assessee was eligible for the deduction u/s. 80IB(10) for the row house. Issue 2: Granting of Pro-rata Deduction u/s. 80IB(10) for Eligible Units The Revenue appealed against the Commissioner of Income Tax (Appeals)'s decision to grant pro-rata deduction u/s. 80IB(10) for eligible units in the housing project. The Tribunal noted that the principle of granting pro-rata deduction u/s. 80IB(10) for eligible units is well-established by the Hon’ble Jurisdictional High Court. Since the Tribunal allowed the assessee's appeal regarding the row house, the entire housing project "Shyama Heritage" qualified for deduction u/s. 80IB(10). Therefore, the Revenue's appeal on this issue became infructuous and was dismissed. Conclusion: The appeal of the assessee was allowed, granting the deduction u/s. 80IB(10) for the row house by excluding the terrace area from the built-up area calculation. The appeal of the Revenue was dismissed as the entire housing project qualified for the deduction. The order was pronounced on November 15, 2017.
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