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TMI Blog2017 (1) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... t of disallowance of claim of deduction u/s 80IB(10) without appreciating the fact that the built up area of the Villas constructed by the assessee is 1620.81 sq. ft. that exceeds the prescribed limit of 1500 sq. ft., thereby ignoring the definition as given in section 80IB(14)(a) of Income-tax Act, 1961. (ii)(a) Whether on the facts and circumstances of the case and in law, the ld. CIT (A) has erred in deleting the addition of ₹ 23,310/- made for depositing the employees contribution to PF beyond the prescribed time limit provided in the respective Acts. (ii)(b) Whether on the facts and circumstances of the case and in law, the ld. CIT (A) has erred in holding that employees contribution to PF ESI are governed by the provision of section 43B and not by section 36(1)(va) read with section 2(24)(x) of the IT Act. (iii) The appellant craves its rights to add, amend or alter any of the grounds on or before the hearing. 2. Briefly stated the facts are that the case of the assessee was picked up for scrutiny assessment and the assessment was framed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) vide order dated 23.01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the villa exceeds the limit of 1500 s. ft. prescribed under section 80B(10). Even otherwise, the assessee himself has included 33.33% of the area taken by it as terrace (i.e. 105 s.ft) in the calculation, but this has been excluded for working out built up area. If we add this area of 105 S.ft, the total comes to 1580.81 S.ft, which is more than the prescribed limit of 1500 S. ft. In this case, the assessee has made an attempt to exclude the balconies attached and accessible from the two bed-rooms, terming it as terrace so as to claim the deduction. As discussed above, if the area of the balconies is included, the built up area comes to 1772.81 S. ft, which is much more than the prescribed limit of 1500 S. ft. Since the basic eligibility condition as laid down in clause (c) of Sec. 80IB(10) is not fulfilled, the benefit of deduction u/s 80IB(10) cannot be allowed to the assessee. The built-up area of the shops and other commercial establishments included in the housing project does not exceed (three) per cent of the aggregate built-up area of the housing project or [five] thousand square feet, whichever is higher]; It has been stated that the no commercial establishmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l unit, there is no construction in this area and it is open to sky. (vii) 33.33% of the area of this balcony/terrace was charged from the customers. However, this fact may not be directly relevant to the issue at hand in view of the definition of built up area, given expressly in the Act. 3.3. At this stage, it will be pertinent to discuss the case laws on this issue - (a) In the case of CIT vs. Mahalakshmi Housing (2014) 222 Taxman 356 (Mad), the Madras High Court has held that open terrace cannot form a part of the built up area. (b) In the case of Commonwealth Developers CD Fountainhead vs. ACIT (2014) 267 CTR 297 (Bom.), the Bombay High Court has held that the rear courtyard cannot form a part of the built up area of a row house. In this case, the ITAT, Panaji had earlier held that rear courtyard would form part of the built up area of the row house. The Bombay High Court quashed the above decision by holding that for including any area as built up area there should be something built in such area. When an area was open to sky, question of holding that there was anything built there, to be included as built up area, would not arise at all. The rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... versed the above decision of the ITAT Chennai and held that open, private terrace area could not be the subject matter of inclusion to built up area to deny the benefit of section 80IB of the I.T. Act, 1961. (d) In the case of Amaltas Associates vs. ITO (2011) 142 TTJ (Ahd.) 849, the ITAT Ahmedabad on a similar issue has held as under :- Built-up area means inner measurement 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. It was an admitted fact that the open terrace in front of pent-house was considered as balcony/verandah. The open terrace being not covered and open to sky would not be part of the inner measurement of the residential floor at any floor level. The definition of built-up area is inclusive of balcony which is not open terrace. The DVO had considered the open terrace as analogous to balcony/verandah without any basis. Therefore, the lower authorities were not justified in rejecting the claim of the assessee by taking the open terrace as balcony/verandah. Therefore, the assessee had complied with all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the identical facts in ITA No. 12/Kol/2014 in the case of M/s. Ashina Amar Developers vs. ITO after considering the case law and provisions of section 80IB has decided the issue by observing as under :- 4.2.1. We find that the Learned AO during the course of assessment proceedings asked the assessee inter alia to submit before him the copies of brochure issued by the assessee to the prospective buyers for effecting the sale of residential units during the asst year under appeal. The assessee duly made available the copies of the brochure issued in order to attract prospective buyers and also copies of original sale deeds before the Learned AO which were duly returned by the Learned AO after verification. We find that the Learned AO calculated the super built up area of each building based on the brochures by including the area of open terrace and therefrom estimated the built up area by taking 90% of the super built up area of each building as built up area. We find that the Learned AO brushed aside the argument of the assessee that the brochures are only indicative in nature and the actuals may vary from what is stated in the brochures. The assessee also tried to explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties below were not justified in taking the open terrace as balcony / verandah rejecting the claim of the assessee. 4.2.4. Reliance in this regard is placed on the decision of Hon ble Madras High Court in the case of CIT vs M/s Mahalakshmi Housing in Tax Case (Appeal) Nos. 583 584 of 2011 and 316 317 of 2012 dated 2.11.2012, wherein the questions raised before their Lordships and the decision rendered thereon are as under:- Whether on the facts and circumstances of the case, the Appellate Tribunal is right in law in holding that the private terrace area should be included in the built up area of the flats for the purpose of making out statutory extent of built up area as per Clause (a) of Section 80IB(14) of the Income Tax Act ? Held: 5. It is seen from the facts narrated herein that the assessee is engaged in the business of construction. The assessee entered into an agreement of sale with one Ashok Kumar for joint development of the property. The assessee's claim for deduction under Section 80IB(10) of the Income Tax Act is rejected on the ground that the assessee was not the owner of the land. Aggrieved by the same, the assessee went on appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The facts before the Hon'ble High Court were that assessee had constructed various apartment blocks and each block had 64 apartments. The apartments located at first to sixth floor were of areas less than 1500 sq.ft.. However, the flats located on the 7th floor had the advantage of exclusive open terrace. While considering the relief u/s 801B(10) of the Act, the Assessing Officer took into consideration the area of such exclusive/private open terrace as a part of the built-up area of the units located at the 7th floor. After considering the above aspect, the built-up area of the flats located at the 7th floor exceeded 1500 sq.ft. and hence the Assessing Officer held that the condition prescribed in clause (c) of section 8018(10) of the Act was not fulfilled. The said position taken by the Assessing Officer was upheld right up to the Tribunal. However, the Hon'ble High Court disagreed with the stand of the Revenue and held that such open terrace would not be includible in the calculation of 'built-up area' for the purpose of examining the condition prescribed in clause (c) of section 8018(10) of the Act. In this view of the matter, the aforesaid judgement of the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he face of terrace being an open area, not being a projection and hence, not included in the plinth area, the question herein is as to whether the Tribunal is justified in confirming the order of assessment to include the terrace area into the built-up area solely by reason of the fact that the assessee had sold it to purchasers of the 7th floor as a private terrace. 30. We do not think, the Tribunal is justified in taking the view that open terrace would form part of the built-up area for the purpose of sub-clause (c) of section 80-IB(10). As already seen in the preceding paragraphs, an assessee having an Approved Plan project alone has the right to claim deduction under section 80-IB. Any project undertaken not approved by the Local Authority is outside the purview of the Act. Thus, when a Local Authority, endowed with the jurisdiction to grant the approval is guided in its approval by Regulation as to what constitutes the plinth area, which is the built-up area, it is difficult for us to agree with the contention of the Revenue as well as the reasoning of the Tribunal that for the purpose of considering the claim under section 80-IB, the built-up area would be different fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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