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2012 (10) TMI 222 - AT - Income TaxDeduction u/s 80IB Assessee engage in business of construction and developer AO argued that assessee has violated the provisions of 80IB (10) by constructing, more than 1500 sq.ft. per unit Assessee contended that total built up area of none of the flats exceeds 1500 sq.ft. if balcony/terrace are excluded Held that - Following the decision in case of HAWARE ENGINEERS & BUILDERS PVT LTD (2012 (6) TMI 386 - ITAT MUMBAI) that definition of built up area as per Sub-section 14(a) of Sec. 80 IB is inserted by Finance Act (No.2) w.e.f. 1st April 2005 and therefore, the same is applicable only in respect of the projects approved after 1st April 2005 and consequently balconies/terrace cannot be included in the built up area of the flats in the assessee s housing project which was approved prior to 1st April 2005 and A.Y. involved in the impugned appeal is A.Y. 2004-05. Since after excluding the projections and balconies, none of the combined flat exceeds the built up area of 1500 sq.ft., a fact brought on record by the Ld CIT(A) and not controverted by the Revenue. Therefore benefit of deduction u/s. 80 IB (10) cannot be denied. Issue decides in favour of revenue
Issues Involved:
1. Eligibility for deduction under Section 80IB(10) of the Income Tax Act, 1961. 2. Definition and computation of "built-up area" for the purpose of Section 80IB(10). 3. Applicability of Section 80IB(14)(a) defining "built-up area" retrospectively or prospectively. 4. Admission of additional evidence by the CIT(A). Issue-wise Detailed Analysis: 1. Eligibility for Deduction under Section 80IB(10): The primary issue was whether the assessee was entitled to claim a deduction under Section 80IB(10) of the Income Tax Act, 1961. The assessee, a promoter and builder, claimed deductions on profits from a project named 'Prime Heights'. The Assessing Officer (AO) disallowed the deduction on the grounds that the built-up area of some units exceeded the 1500 sq. ft. limit specified in Section 80IB(10)(c). The CIT(A), however, allowed the deduction, leading to the Revenue's appeal. 2. Definition and Computation of "Built-up Area": The AO calculated the built-up area, including projections and balconies, as per the definition in Section 80IB(14)(a), which was introduced w.e.f. 1.4.2005. The AO noted that combining two flats resulted in exceeding the 1500 sq. ft. limit. The CIT(A) held that the definition of built-up area as per Section 80IB(14)(a) was prospective and not applicable to the assessment years in question (2003-04 and 2004-05). The CIT(A) relied on various Tribunal decisions, including ITO vs. A.R. Developers and ACIT vs. Sheth Developers (P) Ltd., which held that the definition was prospective. 3. Applicability of Section 80IB(14)(a): The Tribunal upheld the CIT(A)'s view that the definition of built-up area in Section 80IB(14)(a) introduced by the Finance Act (No.2) w.e.f. 1.4.2005 was prospective. Therefore, it was not applicable to projects approved before this date. The Tribunal cited decisions from the Mumbai Bench in the case of Haware Constructions (P) Ltd. and Pune Bench in D.S. Kulkarni & Associates, which supported this interpretation. 4. Admission of Additional Evidence by the CIT(A): The CIT(A) admitted additional evidence in the form of an architect's certificate, which provided measurements of the built-up areas of the flats. The AO objected to the admission of this evidence. The CIT(A) justified the admission, stating that the measurements were already apparent from the floor plans and brochures provided during the assessment. The architect's certificate was merely to quantify these measurements. The Tribunal agreed with the CIT(A) on admitting the additional evidence, finding the explanation acceptable. Conclusion: The Tribunal dismissed the Revenue's appeals for the assessment years 2003-04 and 2004-05, upholding the CIT(A)'s decision to allow the deduction under Section 80IB(10). For the assessment year 2005-06, the Tribunal also dismissed the Revenue's appeal and allowed the assessee's appeal, directing the AO to allow the deduction claimed under Section 80IB(10). The Tribunal concluded that the amended provisions of Section 80IB(14)(a) were not applicable to projects approved before 1.4.2005, and thus, the built-up area should be computed excluding balconies and terraces.
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