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2020 (9) TMI 676 - HC - Income TaxDeduction u/s 80IB - specific definition for the term 'built-up area' - Car parking inclusion calculation of built-up residential units - HELD THAT - As decided in C. SUBBA REDDY (HUF) 2010 (12) TMI 248 - ITAT, CHENNAI Section 80IB(10) of the Income Tax Act speaks about the residential unit having a maximum built-up area of 1500 sq.ft. to claim deduction. CIT(Appeals) has correctly held that built-up area is only the inner measurement of the residential units at the floor level plus projections and balconies plus thickness of the walls. But, the car parking area is not a living space and it is a common area which can be accessed by anyone since it has no boundary wall. No justification in including the car park in the definition of the built-up area of the residential unit for the purpose of determining the maximum built-up area. In such view of the matter, we are inclined to accept the reasoning of the Commissioner of Income Tax (Appeals) drawing support from the Tamil Nadu Apartment Ownership Act, 1994, which was confirmed by the Tribunal. See SHRI. SUBBA REDDY (HUF) 2015 (2) TMI 257 - MADRAS HIGH COURT Assessee is entitled to the benefit of deduction under Section 80IB of the Act. Accordingly, the Appeal filed the Revenue is liable to be dismissed and the same is hereby dismissed. The question of law is answered in favour of the Assessee.
Issues:
Entitlement to deduction under Section 80IB of the Income Tax Act for the Assessment Year 2005-2006. Analysis: The High Court of Madras dealt with the issue of the Assessee's entitlement to deduction under Section 80IB of the Income Tax Act for the Assessment Year 2005-2006. The Revenue challenged the order of the Income Tax Appellate Tribunal, questioning whether the Assessee was rightly granted the deduction. The Tribunal's findings highlighted the dispute regarding the inclusion of car parking areas in the built-up area for the purpose of verifying the permissible limit of 1500 sq.ft as prescribed in the section. The Tribunal concluded that the car parking area should be excluded from the calculation of built-up residential units based on the Tamil Nadu Apartments Ownership Act and agreements with buyers. This decision was in line with a previous judgment of the court in a similar case for the preceding Assessment Year 2004-2005. The court referred to a co-ordinate Bench judgment in CIT v. Subba Reddy (HUF) where it was emphasized that the definition of "built-up area" excludes common areas shared with other residential units. The court analyzed the provisions of Section 80IB(10) and Section 80IB(14)(a) of the Income Tax Act to determine the computation of the built-up area for claiming deductions. It was concluded that there was no justification for including the car park in the definition of the built-up area of the residential unit. The court upheld the reasoning of the Commissioner of Income Tax (Appeals) and the Tribunal, based on the Tamil Nadu Apartment Ownership Act, in excluding the car parking area from the built-up area calculation. Given that the issue was already settled by a previous decision of the co-ordinate Bench of the court, the present Appeal was disposed of accordingly. The court held that the Assessee was entitled to the benefit of deduction under Section 80IB of the Act. Consequently, the Appeal filed by the Revenue was dismissed, and the question of law was answered in favor of the Assessee and against the Revenue.
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