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TMI Blog2009 (6) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... ngth in the argument that any addition of wall area thickness would not take it beyond 92.25 sq.mtr. which is equivalent to 1000 sq. ft - this issue has been correctly answered by the learned CIT(A) when he has given a finding that on verification the total built up area of all the four flats of A & B Wing of Neptune Project tallied with the built-up area of the floor as per the approved BMC plan - Held that: none of the units exceeded the 1000 sq.ft. limit in the Neptune project and the assessee was eligible for claiming deduction under section 80-IB(10) Regarding Jupiter project - D.V.O. Report dated 12-5-2008, though as aforesaid, it was obtained after the assessment it clearly shows that in none of the flats in Jupiter project exceeded 1000 sq. ft. - Appeal of the assessee is partly allowed - IT APPEAL NOS. 4497 AND 4545 (MUM.) OF 2006 - - - Dated:- 25-6-2009 - D.K. AGARWAL, ABRAHAM P. GEORGE, JJ. Ajay Srivastava for the Appellant. Vijay Mehta for the Respondent. ORDER Abraham P. George, Accountant Member. These cross appeals filed by the revenue and the assessee are directed against the order of the learned Commissioner of Income-tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 831.3 1070.86 Neptune A1 1 865.21 1042.57 Neptune B1 1 831.3 1094.59 Neptune A4 1 831.3 1001.71 Jupiter A1 1 to 8 858.75 1045.89 Jupiter A2 1 to 8 858.75 1045.89 Aishwariya A1 2 to 8 907.73 1017.36 Aishwariya A1 1 857.89 1017.36 Aishwariya B2 2 to 8 853.90 1042.61 Aishwariya B2 1 853.90 1049.80 Assessee was thereafter required to explain why deduction under section 80-IB should not be denied on the above projects. Submission of the assessee was that the method followed for arriving at the built up area, which was forced upon the assessee by the Assessing Officer, was not correct. According to it, built up area had to be worked out based on the carpet area of each of the flats aggregated with the area occupied by the thickness of the walls therein. It also submitted certain workings giving such areas of certain representative sample flats in each of the project. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t could not be considered so. However he proceeded to add excess over 10 per cent of carpet area based on the BMC rules mentioned above. Thus by resorting to the method of grossing up from carpet area to built up area and thereafter aggregating balcony area in excess of 10 per cent of carpet area, Assessing Officer came to a conclusion that flats in Aishwariya project exceeded 1,000 sq. ft. 4. As for the project Netpune , assessee s work out of the built up area given to the Assessing Officer was as under: Particulars Carpet area (in Sq.mtrs.) Add.Wall area (in Sq.mtrs.) BUP as per ratio (in Sq.mtrs.) BUP (in Sq.mtrs.) 2 Wing Wing A 1 80.38 12.49 92.87 999.65 2 54.81 3 54.81 4 77.23 77.23 831.3 Total 267.23 12.49 170.1 1830.95 Particulars Carpet area (in Sq.mtrs.) Add.Wall area (in Sq.mtrs.) BUP as per ratio (in Sq.mtrs.) BUP (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission of the assessee was that balcony could not form part of the built area. In fact this submission applied to the claims on all the projects. Assessee contented that balcony as defined in the rules of the BMC Rules was relevant only for the purpose of calculation of FSI and had nothing to do with the meaning of built up area as per the Income-tax Act with reference to section 80-IB. According to the assessee, the methodology developed by the Assessing Officer by grossing up the carpet area to arrive at the built up area based on floor-wise map appended to the occupancy certificate had resulted in unreal calculations. In other words, assessee s submission was that its calculation of built up area by aggregating carpet area with wall thickness area ought not have been rejected. As regards its inability to furnish the details of built up area in respect of each and every unit in the projects, the submission of the assessee was that in every case where there was at least a remote possibility of built up area exceeding 1000 sq.ft. it had given the work out. According to the assessee such work out was irrelevant where the carpet area was very much on the lower side, with no chance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng up the carpet area based on a ratio was incorrect. Therefore, accepting the workings given by the assessee, he directed the Assessing Officer to allow it deduction under section 80-IB(10) of the Act in the case of Neptune project. 10. Now coming to the last of the projects involved in the controversy, namely Jupiter project, assessee s submission was that the difference of 8.9 sq. mtrs. in the built up area of A Wing between the workings given by the assessee and the BMC plan was solely on account of a typographical error in the BMC plan wherein, by mistake, the built up area of Neptune project was duplicated. As regards other aspect relating to non-furnishing of details for each of the flats and grossing up of the carpet area to arrive at the built up area, its submissions were the same as made for other two projects. Further contention was that assessee was compelled to give various workings of the built-up area in the formats prescribed by the Assessing Officer and thereafter the Assessing Officer tried to pick discrepancies in such different work outs and make the assessee explain such hypothetical differences. According to the assessee the only working voluntarily giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2004 would apply retrospectively and, therefore, such term had to be understood as though, it always included therein projections and balconies. According to him if the balconies were also considered, without dispute, both the Neptune as well as Jupiter projects would fall out of the purview of section 80-IB of the Act. According to him sub-section (14) of section 80-IB was independent of sub-section (10) and maximum built up area stipulated under sub-clause (c) of sub-section (10) of section 80-IB was there in the Act from the very date of its introduction. Learned DR submitted that the definition of built-up area though introduced in the Act by the Legislature through Finance (No. 2) Act, 2004, it would retrospectively apply, since there was no definition for such term prior to such introduction. The crux of his contention was that the term built-up area should be construed as including projections and balconies from the inception of sub-section (10) of section 80-IB and, therefore, an assessee could not be heard to say that balconies should be excluded for working out the built-up area. Specific attention was brought to the fact that the assessee was charging its customers f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered for computing the built-up area. In support of the order of the learned CIT(A) sustaining the disallowance of deduction for Aishwariya project, learned D.R. submitted that assessee by itself had admitted to some flats exceeding 1000 sq. ft. and therefore failed in satisfying one of the essential condition specified in clause (c) of sub-section (10) of section 80-IB of the Act. According to the learned D.R. every unit of the project should be less than 1000 sq.ft. for claiming deduction under section 80-IB of the Act. 13. In response to the above, learned counsel for the assessee submitted that definition of built up area as given under sub-clause (a) of sub-section (14) could not be considered as retrospective for the simple reason that Finance (No. 2) Act, 2004, through which the said clause was introduced clearly specified that it would be effective from 1-4-2005. Further, according to him, it was through the same Finance Act that sub-section (10) of section 80-IB was substituted and the Special Bench of this Tribunal in Brahma Associates case (supra) had held that clause (d) of sub-section (10) introduced through the same Finance Act with effect from 1-4-2005 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... probate and reprobate according to the circumstances, would be a travesty of justice. Learned counsel for the assessee also brought to the attention of the Bench that subsequent to the assessment, the Assessing Officer concerned had referred the issue regarding measurement of various flats in all the three projects in dispute to the Departmental Valuation Officer. According to him as per the report of the Deptt. Valuation Officer, built-up area in each of the flats in Neptune and Jupiter projects was less than 1000 sq.ft. Therefore, in his opinion there was no reason why the learned CIT(A) findings with regard to these two projects were to be disturbed. In support of his contention that local laws cannot be used for defining a term used in a central enactment, he relied on the decisions of the Hon ble jurisdictional High Court in the case of Bennet Colemen Co. Ltd. v. Asstt. CWT [2008] 234 ITR 2351 (Bom.), and those of the Hon,ble Apex Court in Jagatram Ahuja v. CGT [2000] 246 ITR 6092 and CIT v. Venkateswara Hatcheries (P.) Ltd. [1999] 237 ITR 1743. For his contention that revenue cannot improve upon the case of the Assessing Officer the learned counsel relied on the decisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the BMC be considered as applicable for taxation purpose also. 17. Taking the first question, definition of built-up area as per clause (a) to sub-section (14) of section 80-IB runs as under : "built-up area means the inner measurements of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls but does not include the common areas shared with other residential units." Thus the definition as introduce by Finance (No. 2) Act, 2004, itself starts with inner measurement of the residential unit to start with. Even as per the Assessing Officer, the common parlance meaning of built-up area is the area enclosed within the external walls of a flat. Thus, whether it is the inner measurement or the outer measurement, one thing is amply clear that, it should be the actual measurements and not any estimates. There is no dispute between the parties with regard to carpet areas, for, both the assessee as well as the Assessing Officer has taken the same carpet areas while starting their respective work-outs. However, the Assessing Officer relied on a ratio he worked out from the map attached with the occupancy certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for an inclusive definition as elucidated by the Hon ble Apex Court in the case of CIT v. Taj Mahal Hotel AIR 1972 SC 168 is that if the word include is used in an interpretation clause, it must be construed as comprehending not only such things as it signify according to their nature and import, but also things which the interpretation clause declares that they shall include. So normal meaning of built-up area, but for the definition including projec- tion and balcony, would definitely exclude the latter. Even according to the Assessing Officer himself, built-up area as normally understood in common parlance means area enclosed within the external lines of the external walls. Therefore, there can be no doubt that prior to the introduction of the definition clause aforesaid, built-up area would not include projections and balconies as normally understood. Now the question whether the definition clause mentioned above can be deemed as retrospective, we are afraid we have to answer against the revenue. Number one, the enactment itself clearly specifies that clause will have effect from 1-4-2005. Number two, it is not a procedural section but a definition section, where an enlarged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R-2) or in a purely residential building in any other zone, balconies may be permitted free of FSI at each floor, excluding the ground and terrace floors, of an area not more than 10 per cent of the area of the floor from which such balcony project subject to the following conditions : (i)No balcony shall reduce the minimum marginal open space to less than 3 m. at the rear and sides and 1.5 m in the front. The width of the balcony will be measured perpendicular to the building line and reckoned from that line to the balcony s outermost edge. (ii)Balconies may be allowed to be enclosed with written permission of the Commissioner. When balconies are enclosed, one-third of their faces shall have louvers glass shutters or grills on the top and the rest of the area except the parapet shall have glazed shutters." Plain reading of the above show that the above mentioned rules were concerned with calculation of FSI and it was not in any way meant that built area can include balcony in excess of 10 per cent of the carpet area. There is considerable strength in the argument of the learned counsel for the assessee that adopting a definition formulated in a regulation promulgated based o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned CIT(A) when he has given a finding that on verification the total built up area of all the four flats of A B Wing of Neptune Project tallied with the built-up area of the floor as per the approved BMC plan. Nothing has been brought on record by the learned A.R. to rebut this finding. Down the line, if we see the DVO report dated 12-5-2008 it corroborates assessee s contention that none of the flats in the Neptune building exceeded a built-up area of 1000 sq. ft. Of course, the above-mentioned DVO Report was after the assessment but nevertheless the reference having been made by the Assessing Officer himself, it cannot be brushed aside. Therefore, insofar as the building Neptune was concerned, we are of the opinion that none of the units exceeded the 1000 sq.ft. limit and the assessee was eligible for claiming deduction under section 80-IB(10) of the Act. Learned CIT(A) had correctly appreciated this and given the benefit to the assessee. 21. Now coming to the Jupiter building, apart from the same reasoning as given for the building Neptune, Assessing Officer has also found that assessee had submitted built-up area differently and variations were noted in wall ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O s work-out show that built-up area of flats in Block A and built-up area of eight flats out of sixteen flats in respect Block B exceeded 1000 sq. ft. However in blocks C to E which consisted of 96 flats, the built-up area were less than 1000 sq. ft. in each of the case. Thus, without doubt by assessee s own admission, at least in a few cases, the built-up area exceeded 1000 sq. ft. Now the question is whether the benefit of section 80-IB(10) can be given to a project even where some of the units exceeded 1000 sq.ft. of built-up area. As aforesaid assessee was denied deduction under section 80-IB(10) only for a reason that it failed the test of limit in 1000 sq. ft. In the case of Bengal Ambuja Housing Development Ltd. (supra), we find that a similar issue had arisen. The question referred by the revenue before the Tribunal, was as under : "(i)That on the facts and in the circumstances of the case, the ld. CIT(A) has erred in directing the Assessing Officer to allow deduction of Rs. 1,85,81,905 under section 80-IB(10) in respect of the profits of housing project Udita-III in spite of the fact that built up area of 111 residential units of the said project are above 11500 sq. ft. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Tribunal in the case of ITO v. AIR Developers [IT Appeal No. 447 (Nag.) of 2007, dated 21-5-2008]. After referring to the decision in Bengal Ambuja Housing Development Ltd. s case (supra), it was held by the Tribunal at para 6.7 of its decision dated 21-5-2008 as under : "The ratio of the above decision of the ITAT, Kolkata Bench would be squarely applicable to the case under consideration before us because the facts are identical. Moreover, even if it is held that in view of the above two decisions of the ITAT, two views are possible with regard to interpretation of section 80-IB(10), it is a settled law that the view favourable to the assessee should be adopted. Section 80-IB(10) is a beneficial provision and it has been held by the Hon ble Apex Court in the case of Bajaj Tempo Ltd. 196 ITR 188 that a beneficial provision should be interpreted liberally. If an assessee has developed a housing project, wherein the majority of the residential units has a built-up area of less than 1500 sq.ft. i.e., the limit prescribed by section 80-IB(10) and only a few residential units are exceeding the built-up area of 1500 sq. ft., there would be no justification to disallow the entire d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal with one grievance taken by the revenue as a part of one of its grounds, more specifically ground number three, regarding admission of additional evidence by the Ld. CIT(A) in violation of rule 46A. We find that the ld. CIT(A) had not relied on any new evidence. What were made available before him by the assessee were the very same plans and work-outs, which were given by it before the Assessing Officer. It might be true that assessee would have made many submissions before the Ld. CIT(A), but such submissions based on the evidence already produced before the Assessing Officer would not by itself become additional evidence. In any case, Ld. DR was unable to specifically point out any such evidence relied on by the Ld. CIT(A). Therefore in our opinion this grievance is without any merits. 25. Now we are left with three grounds of the revenue and 3 grounds of the assessee. Out of this, ground Nos. 5 6 of the revenue is general in nature and do not need any adjudication, whereas the learned counsel for the assessee submitted that he is not pressing ground Nos. 5 to 7 of assessee s appeal. Therefore, ground Nos. 5 to 7 of the assessee s appeal stands dismissed as not pressed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer. Per contra, learned A.R. reiterated the contentions made before the CIT(A). 30. We have heard the rival contentions and perused the orders. There is no doubt that assessee had incurred the expenditure of Rs. 1,16,25,414 on home for aged and Club House and this was a part of Vasant Leela project . There is also no dispute that assessee had completed 6,40,990 sq. ft. out of the total planned area of 6,69,760 sq.ft. in the project and also sold it. In other words, we find that assessee had completed more than 95 per cent of the project and offered income therefrom on an year to year basis. Therefore, there is considerable strength in its argument that the expenses incurred for the club house and home for aged which was for the benefit of the whole of the project, work on which was completed in the relevant previous year had to be allowed as business expenditure. There is no case for the revenue that the home for aged and the club house was not a part of the project. Therefore, we find no error in the order of the learned CIT(A) in allowing the claim of the assessee. No inference is called. In the result, ground No. 4 of the revenue stands dismissed. 31. In the result ..... X X X X Extracts X X X X X X X X Extracts X X X X
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