2015 (2) TMI 364 - HC - Income Tax

Eligibility for deduction under section 80-IB(10) - area of plot on which the following project is constructed is less than 1 acre - area of the flat constructed is more than 1,500 sq. ft. - Held that - The Tribunal correctly negated the Departmental representative's contention the agreement indicates super built-up area of more than 1,500 sq. ft. cannot be accepted as super built-up area includes common areas, stair cases and also balcony. The the concept of super built-up area cannot be equated with the built-up area as per the regulations which refers to only to carpet area excluding the balcony and the terrace. The words including projections and balconies were inserted with effect from April 1, 2005, by the Finance Act of 2004. The question whether the definition of built-up area with effect from April 1, 2005, was prospective or retrospective in nature has been considered by in CIT v. Tinnwala Industries 2014 (7) TMI 90 - BOMBAY HIGH COURT which holds that this definition which has been brought on the statute book with effect from April 1, 2005, would not apply to such projects which are completed prior to April 1, 2005. There are no distinguishing features brought on record which calls for any interference. The Tribunal view is a well reasoned and cannot be said to be perverse. Mr. Chhotaray's submission that the matter should be sent back to the Tribunal has no merit. In the present set of facts, even if the definition of built-up area is considered it makes no difference to the assessee's case. Area of entire project is more than one acre and the area of flat is within limit of 1,500 sq. ft. as has been observed by the Tribunal which is last fact finding authority - Decided in favour of assessee.

Summary

Issues involved:
1. Interpretation of section 80-IB(10) of the Income-tax Act, 1961 regarding eligibility for deduction.
2. Determination of the maximum built-up area for residential units under section 80-IB(10).
3. Application of the definition of built-up area as per the Finance Act of 2004.
4. Consideration of the retrospective or prospective nature of the definition of built-up area.

Detailed analysis:
1. The judgment addresses six appeals under section 260A of the Income-tax Act, 1961, focusing on the common question of law regarding the eligibility of the assessee for deduction under section 80-IB(10) for the assessment year 2006-07. The Tribunal held in favor of the assessee, emphasizing compliance with the provisions of section 80-IB(10), despite the Assessing Officer's disallowance based on the size of the residential units in the project.

2. The Commissioner of Income-tax (Appeals) found that the appellant did not meet the conditions of clause (b) of section 80-IB(10) due to the project being on a plot of land less than one acre. However, the Income-tax Appellate Tribunal allowed the appeals, considering the flat area to be less than 1,500 sq. ft., making the assessee eligible for the deduction under section 80-IB(10).

3. The judgment delves into the amendments made to section 80-IB(10) by the Finance Act 2003-04 and the subsequent changes introduced by the Finance (No. 2) Act, 2004, which significantly impacted the eligibility criteria for deductions in housing projects. The concept of "super built-up" area is discussed in relation to determining the actual built-up area for residential units.

4. The court analyzes the definition of built-up area as per section 80-IB(14)(a) and its amendment by the Finance Act of 2004, specifically regarding the inclusion of projections and balconies in the measurement. The judgment references a previous case to establish that the definition of built-up area with effect from April 1, 2005, does not apply retrospectively to projects completed before that date.

In conclusion, the court rules in favor of the assessee in all the appeals, affirming compliance with the provisions of section 80-IB(10) and rejecting the Revenue's contentions. The judgment provides a detailed interpretation of the relevant legal provisions and definitions while emphasizing the factual findings of the Tribunal as the final authority in determining eligibility for deductions under the Income-tax Act.