2019 (2) TMI 276 - AT - Income Tax

Deduction u/s.80IB(10) - reopening of assessment - Computation of maximum built up area appearing in clause(c) of section 80IB(10) - Held that - CIT(A) has held that for the purposes of computing the maximum built up area appearing in clause(c) of section 80IB(10), the area covered by balcony, terrace, box and projections as appearing in clause (a) of section 80IB(14) has to be excluded. After the exclusion of the areas covered by balcony, terrace, box and projections the built up area of all the rowhouses constructed by the assessee does not exceed 1500sq.ft. in area. Hence, the assessee has fulfilled the conditions laid down for claiming deduction u/s.80IB(10) of the Act and the same was allowed by the CIT(Appeals). That even as per the legal parameters opined by the Hon ble Karnataka High Court as on record, it is very much clear that the projections whatever was taken prior to the amendment in definition of built up area which got inserted in sub section (a) of section 80IB, which came into effect from 01.04.2005, the rigors of the amendment cannot be applied retrospectively to put the assessee in jeopardy. No infirmity in the order of CIT(Appeals) and therefore, relief granted by CIT(Appeals) to the assessee is sustained. Accordingly, grounds of appeal raised by Revenue for the assessment year 2007-08 are dismissed.

Summary

Issues:
Appeals by Revenue challenging deletion of additions disallowing deduction u/s.80IB(10) for assessment years 2007-08 and 2008-09.

Analysis:
1. The appeals by Revenue were based on the deletion of additions made by the Assessing Officer disallowing deduction u/s.80IB(10) of the Income Tax Act, 1961. The Ld. CIT(A) provided relief to the assessee by deleting these additions for both assessment years.

2. The crux of the matter revolved around the definition of "built-up area" under section 80IB(14) of the Act. The Ld. CIT(A) held that the amendment regarding this definition, effective from 01.04.2005, was substantive and not clarificatory. Therefore, it did not have retrospective effect on projects approved before the amendment, as in the case at hand.

3. The Ld. CIT(A) referred to the direction by the Hon'ble Karnataka High Court, stating that the amendment concerning the built-up area was substantive and not clarificatory. Consequently, the areas covered by balconies, terraces, boxes, and projections were to be excluded from the calculation of the maximum built-up area under section 80IB(10).

4. The Departmental Valuation Officer's reports played a crucial role in determining the built-up area, with discrepancies noted between the initial and subsequent reports. The Assessing Officer failed to consider the second report and disregarded the direction given by the Ld. CIT(A) regarding the exclusion of certain areas in the calculation.

5. The Tribunal, after analyzing the facts and legal precedents, upheld the decision of the Ld. CIT(A) to allow the deduction claimed u/s.80IB(10) for the assessee. The Tribunal found no fault in the relief granted by the Ld. CIT(A) and dismissed the grounds of appeal raised by the Revenue for the assessment year 2007-08.

6. Consequently, the appeal of the Revenue for the respective assessment year was dismissed, and the decision was applied to another similar appeal by the Revenue for a different assessment year. In a consolidated result, both appeals by the Revenue were dismissed by the Tribunal.

This detailed analysis highlights the key legal interpretations and factual considerations leading to the dismissal of the Revenue's appeals challenging the disallowance of deductions under section 80IB(10) for the relevant assessment years.