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TMI Blog2024 (7) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IB (14), which included inner measurement of the residential unit at the floor level, including the projections and balconies, as increased by the thickness of the walls, but excluding the common areas, shared with other residential units, cannot be the consideration. It was held that in the absence of applying such parameters to the constructions approved prior to 1 April, 2005, it would be to absurd results, as it could not have been expected from an assessee to comply with such conditions, that was not part of the statute when housing project was approved. Admittedly insofar as the facts of the present appeals are concerned, the project Roseland Residence was sanctioned prior to 1 April, 2005. As decided in Tinnwala Industries [ 2014 (7) TMI 90 - BOMBAY HIGH COURT] the expression built up area introduced with effect from 1 April, 2005 could not be applied retrospectively and the Tribunal was justified in holding upto 1 April, 2005, the expression built up area would exclude the balcony area. Decided in favour of the assessee. - G. S. KULKARNI SOMASEKHAR SUNDARESAN, JJ. For the Appellant : Mr. Ashok Kotangle a/w. Ms. Smita Thakur, Ms. Rajshri Kanade, Mr. Arvind Ghag, Mr. Nike ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istorical turn around by amendments from time to time and keeping in view of the real purpose behind such a provision, we are of the view that in the peculiar scenario as projected in this provision, the aforesaid cardinal principle of tax law is not to be applied as, by necessary implication, application thereof stands excluded. We have already narrated the essence of this provision. For the purpose of discussing this particular issue, it is required to be noted that with effect from 01.04.2001, Section 80IB (10) stipulated that any housing project approved by the local authority before 31.03.2001 was entitled to a deduction of 100 per cent of the profits derived in any previous year relevant to any assessment year from such housing project, provided (i) the construction/development of the said housing project commenced on or after 1.10.1998 and was completed before 31.03.2003; (ii) the housing project was on a size of a plot of land which had a minimum area of one acre; and (iii) each individual residential unit had a maximum built-up area of 1000 sq.ft., where such housing project was situated within the cities of Delhi or Mumbai or within 25 kms. from the municipal limits of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (10). Several new conditions were incorporated for the first time, including the condition mentioned in clause (d). This condition/restriction was not on the statute book earlier when all these projects were sanctioned. Another important amendment was made by this Act to sub-section (14) of Section 80IB with effect from 1.4.2005 and for the first time under clause (a) thereof the words 'built-up area' were defined. Section 80IB (14) (a) reads as under: (14) For the purposes of this section - (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; 18. Prior to insertion of Section 80IB (14) (a), in many of the rules and regulations of the local authority approving the housing project built-up area did not include projections and balconies. Probably, taking advantage of this fact, builders provided large balconies and projections making the residential units far bigger than as stipulated in Section 80IB (10), and yet claimed the deduction under the said provision. To plug this la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mum built up area of 1000 sq.ft. where such residential unit is situated within the cities of Delhi and Mumbai or within 25 kms. from the municipal limits of these cities and 1500 sq.ft. at any other place. (e) It is the cardinal principle of interpretation that a construction resulting in unreasonably harsh and absurd results must be avoided. (f) Clause (d) makes it clear that a housing project includes shops and commercial establishments also. But from the day the said provision was inserted, they wanted to limit the built up area of shops and establishments to 5% of the aggregate built up area or 2000 sq.ft., whichever is less. However, the Legislature itself felt that this much commercial space would not meet the requirements of the residents. Therefore, in the year 2010, the Parliament has further amended this provision by providing that it should not exceed 3% of the aggregate built up area of the housing project or 5000 sq.ft., whichever is higher. This is a significant modification making complete departure from the earlier yardstick. On the one hand, the permissible built up area of the shops and other commercial shops is increased from 2000 sq.ft. to 5000 sq.ft. On the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IB (10) by introducing clause (a) to Section 80IB (14) by Finance (No. 2) Act, 2004 with effect from 1st April 2005. The question is, whether the expression 'built up area' defined with effect from 1st April, 2005 can be applied for the period prior to 1st April, 2005? 6. In the present case, we are concerned for the period prior to 1st April, 2005. During that period, the expression 'built up area' in Section 80IB (10) would have to be construed by assigning a meaning as is commonly understood. It is not in dispute that under the Development Control Regulations framed by the Municipal Corporation for Greater Mumbai, the balcony area is required to be excluded while computing the 'built up area'. If the expression' built up area' in a housing project approved by the local authority does not include the balcony area, then, prior to 1st April, 2005 the same would apply while considering the eligibility under Section 80IB (10) of the Act. That is why, the Legislature has introduced the definition of 'built up area' by including the balcony area with effect from 1st April, 2005. In such a case, where the Legislature with effect from a particul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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