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TMI Blog2013 (9) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... rant of deduction u/s. 80IB(10) of the Act was that the built-up area of each of the flats in the apartment should not exceed 1500 sq.ft. The AO referred the question with regard to built-up area of each flat to the DVO. The DVO submitted his report on 06.11.2007. As per the DVO's report, the following 16 flats had a built-up area which was in excess of 1500 sq.ft. Flat Nos. Block 1, 2, 3 & 4 A 5, 6, 7 & 8 B 1, 2, 3 & 4 C 5, 6, 7 & 8 D 4. The DVO in computing the built-up area of the flats, also included balcony area. According to the AO, the balcony area so included was under the exclusive possession of the flat owners. The assessee however was contending that the balcony area was a common area to be enjoyed by the other flat owners as well and therefore should not be reckoned for the purpose of arriving at the built-up area of each flat. 5. The Assessing Officer held that since the built-up area of each of the flats was not 1500 sq.ft. or less, the assessee was not entitled to get deduction u/s. 80IB of the Act. 6. On appeal by the assessee, the CIT(Appeals) held that Assessee should be allowed deduction u/s.80-IB(10) of the Act on the profits of the project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nit satisfies the condition of 80IB, the assessee is entitled for deduction. So considered, it is only in respect of those units which have not fulfilled the stipulated conditions, deduction should be denied. The appellant also relied upon the Jurisdictional Tribunal's decision of Bangalore 'A' Bench, in the case of M/s. Mystic Investment in ITA 1170/Bang/2007 dated 25-04-2008. The appellant, further relied upon the Hon'ble ITAT's decision in the case of SJR Builders in ITA No.1192/Bang/2008 dated 21-08- 2009 of Bangalore 'A' Bench, wherein it is held that "We hold that in respect of the pent houses the built-up area of which is more than 1500 sft, they may be excluded for exemption. However, in the light of the decision of the Special Bench in the case of Brahma Associates (supra), merely because some flats are larger than 1500 sft, the assessee will not lost the benefit in its entirety. Only with reference to the flats which has more than the prescribed, the assessee will lose the "benefit". 9.0. Following the binding precedent of Hon'ble ITAT Bangalore Bench, I hold that the restriction for deduction u/s. 80IB of Income-tax Act, 1961 is to be made only with reference to area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project or 2,000 sq.ft. whichever is less. (e) The project has to be completed within four years from the end of the financial year in which the project is approved by the local authority." Once these conditions are fulfilled, the assessee would be entitled to the benefit flowing from the aforesaid provision. By a subsequent amendment, the project approval by the local authority was extended to 31.3.2008. The object of the aforesaid tax concession is to provide tax benefit to the person undertaking the investment risk i.e., the actual developer. However, any person undertaking pure contract risk not entitled to the tax benefits. With a view to clarify accordingly, an Explanation after sub-section (1) of Section 80-IB has been inserted so as to provide that nothing contained in sub-section shall apply to any undertaking which executes the housing project as a works contract awarded by any other person including Central or State Government. This amendment has been made applicable with retrospective effect from 1st April, 2001 and will accordingly apply in relation to assessment year 2001-02 and subsequent assessment years. Further, the objective of the tax benefit for housing pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l unit, then that common area has to be excluded from the built up area. If this principle is kept in mind and applied to the facts of this case, in respect of 16 flats, the common area is shared by those 16 owners of residential units. In respect of A-1 and A-2 the common area is shared by the owners of flats A-1 and A-2. This common area is not the subject matter of sale as is clear from the recitals in the sale deed. In other words, the owners of the residential units do not have exclusive right to use these balconies as they have to share it with others. It is immaterial whether they have to share it with other 159 owners of the residential units or they have to share it with the adjoining owner of the residential unit, this area cannot be taken into consideration to decide the built up area. From the facts, it is clear that if this balcony space is excluded all the 160 units are less than 1500 sq.ft. and therefore the assessee was entitled to 100% tax exemption on this project. However, the Appellate Authority as well as the Tribunal have not extended the said benefit to 16 residential units. As the assessee has not preferred any appeal against the said order, it will not be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to have filed the appeal within 60 days from the receipt of the order of the CIT(A) i.e., on or before 18.05.2010. The appeal has however been filed by the assessee only on 26.03.2012. There is a delay of 678 days in filing the appeal by the assessee before the Tribunal. 10. The assessee has filed an application for condonation of delay and the contentions of the said application have been verified by an affidavit of Akash Ranka, partner of the assessee. In the application for condonation of delay, the assessee has stated that when the appeal of the revenue came up for consideration before the Hon'ble High Court of Karnataka, the counsel who appeared on behalf of the assessee before the Hon'ble Karnataka High court, after examining the order of the CIT(A), advised the assessee to file an appeal against the order of the CIT(Appeals), whereby the CIT(A) had not allowed deduction u/s. 80IB of the Act on 16 flats, which according to the CIT(A), exceeded the built-up area of 1500 sq.ft. It has further been mentioned that on receiving such advice, the assessee filed an application within 4 days of obtaining the professional advice. It has further been submitted that if this applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication for condonation of delay. The Hon'ble Apex Court has emphasized that substantial justice should prevail over technical considerations. The Court has also explained that a litigant does not stand to benefit by lodging the appeal late. The Court has also explained that every day's delay must be explained does not mean that a pedantic approach should be taken. The doctrine must be applied in a rational common sense and pragmatic manner. In the case of Shakuntala Hegde, L/R of R.K. Hegde v. ACIT, ITA No.2785/Bang/2004 for the A.Y. 1993-94, the Hon'ble Tribunal condoned the delay of about 1331 days in filing the appeal wherein the plea of delay in filing appeal due to advice given by a new counsel was accepted as sufficient. The Hon'ble Karnataka High Court in the case of CIT v. ISRO Satellite Centre, ITA No. 532/2008 dated 28.10.2011 has condoned the delay of five years in filing appeal before them which was explained due to delay in getting legal advice from its legal advisors and getting approval from Department of Science and PMO. In the aforesaid decision, the Hon'ble Court found that the very liability of the assessee was non-existent and therefore condoned the delay in f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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