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TMI Blog2017 (11) TMI 1302X X X X Extracts X X X X X X X X Extracts X X X X ..... ed opinion, the terrace is to cover the room which is available on the ground floor therefore, terrace is different then balcony which is provided in addition to the facilities whereas terrace goes with the projection of the room. - Decided in favour of the assessee and against the department. X X X X Extracts X X X X X X X X Extracts X X X X ..... al authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority." 5.1 He has also taken us to the definition of Built up area u/s 80IB(10)(14)(a) which reads as under:- "For the purposes of this section,- 1 [(a) "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;" 5.2 He contended that in view of dictionary meaning of "Terrace" appearing in Oxford Dictionary, it is an open gallery, a colonnade, a portico; a balcony, later, a raised platform or balcony in a theater, Auditorium etc. 5.3 He has relied upon the decision of Supreme Court in Commissioner of Income Tax-19, Mumbai vs. Sarkar Builders (2015) 7 SCC 579 wherein it has been held as under:- "23. Thereafter, significant amendment, with which we are directly concerned, was carried out by Finance (No. 2) Act, 2004 with effect from 1.4.2005. This amendment has already been noted above. The Legislature made substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use-(a) thereof provides that 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 builtup area would include inner measurements of a residential unit on the floor level added by thickness of a wall as also projections and balconies. This would however, exclude the common areas shared with other residential units. This exclusion clause of the common areas shared by other units cannot be applied in the reverse. In other words, the moment a certain area is not shared but is exclusively assigned for the use of a particular residential unit holder, would not mean that such area would automatically be included in the built-up area. In order to be part of the built-up area, the same must be part of the inner measurements of a residential unit or projection or balcony. The open terrace space on the top floor of a building would not satisfy this description. It will also not be covered in the expression balcony. Term 'balcony' has been explained in Webster's Third International ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al unit. In fact, a copy of the agreement was even produced before the learned Tribunal to show that the built-up area mentioned in the agreement in respect of each villa is 134.83 sq. mtrs, as computed by the architect. In this background, we shall proceed to examine the rival contentions. The built-up area is the carpet area plus the thickness of outer walls and balcony. The carpet area of a property is defined as net usable area from the inner side of one wall to another. The carpet area comprises of carpet area of the demised premises, toilet areas within such demised premises. Thus, it can be seen that to meet the requirement of an area to be treated as a 'built-up area' some construction has to be in existence in such area. The meaning of the words 'building' and 'built-up' as per the Oxford Dictionary reads thus: 'Building': A structure with a roof and walls. The process or trade of building houses and other structures. 'Built-up': (of an area) densely covered by buildings. Increased in height by the addition of parts. 8. We have heard counsel for the parties. 9. Before proceeding with the matter, it will not be out of place t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that as per the sale deed which was registered with Registrar for stamp duty purposes, the total built up area of each building was below the maximum area specified in section 80IB(10) of the Act. The Learned AO simply ignored the sale deeds that were produced before him and placed reliance on the brochures issued by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein 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 the Commissioner of Income Tax (Appeals), who dismissed the appeal. Aggrieved by the same, the assessee went on further appeal before the Income Tax Appellate Tribunal. 6. The Tribunal considered the assessee's appeal along with two other assessees' appeals involving similar questions of law and passed a common order. One such assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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'ble Madras High Court and which has been further affirmed in a subsequent decision in the case of Sanghvi and Doshi Enterprise (supra), covers the issue before us. 19. However, in the course of hearing, the learned CIT -OR attempted to distinguish the judgement of the Hon'ble High Court by pointing out that the same related to assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 from what has been given approval by the Local Authority, on a building project. Given the fact that during 2003-04 there was no definition at all on what a built-up area is, the understanding of the Revenue, which is evidently contrary to the approval of the Local Authority based on the Rules and Regulations could not be sustained. Consequently, we have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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