Tax Appeal No. 4 of 2014. Case: Commonwealth Developers Vs Assistant Commissioner of Income Tax. High Court of Bombay (India)
| Case Number | Tax Appeal No. 4 of 2014 |
| Counsel | For Appellant: Chythanya K.K. and Shailesh Redkar, Adv. and For Respondents: Ms. Asha Desai, Advs. |
| Judges | R.S. Dalvi and F.M. Reis, JJ. |
| Issue | Income Tax Act, 1961 - Sections 143(3), 263, 80-IB, 80-IB(10), 80-IB(14)(a) |
| Citation | 2014 (267) CTR 297 (Bom), 2015 (370) ITR 265 (Bom) |
| Judgement Date | March 11, 2014 |
| Court | High Court of Bombay (India) |
Judgment:
F.M. Reis, J.
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The above appeal was fixed for final disposal on the following substantial questions of law by order dt. 23rd Jan., 2014:
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Whether the rear courtyard inclosed by walls of a residential unit could be included as built-up area of the residential unit?
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Whether the learned Tribunal can inquire into and get measured the courtyard which was not included in the built-up area and which is not the lis between the parties?
We have heard Mr. Chythanya, learned counsel appearing for the appellant and Ms. A. Desai, learned counsel appearing for the respondent.
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Briefly, the facts of the case are that the appellant/assessee submitted its return of income declaring a total income of Rs. 53,620 on 30th Oct., 2006. An order was passed under s. 143(3) of the I.T. Act on 21st Nov., 2008 on the returned income of Rs. 53,620. Thereafter, CIT invoked its jurisdiction under s. 263 and set aside the order passed under s. 143(3) vide order dt. 30th March, 2011 with a direction to the AO to examine the relevant facts in connection with the claim of deduction of the assessee under s. 80-IB(10) of the I.T. Act. The AO proceeded to examine the claim of deduction of the appellant under s. 80-IB(10) amounting to Rs. 1,71,24,680. The AO ultimately came to the conclusion that the appellant was granted permission on 7th July, 2003 by the Margao Municipal Council for construction of row villas with built-up area of 1,500 sq. ft. comprising of ground floor and first floor and the compound wall in the property bearing Chalta Nos. 34 and 35 of P.T. sheet No. 77 situated at Fatorda, Margao. The AO noted that the appellant did not fulfill the conditions specified under s. 80-IB(10) of the said Act essentially on the ground that only flats/apartments constructed on the land will have common areas sharing with other residential units and as such since the construction of villas/bungalows/row houses are independent and do not share common areas, the appellant did not fulfill one of the conditions specified under s. 80-IB(10) of the said Act and as such invited the objections of the appellant. A reply was filed by the appellant disputing the said contention and inter alia pointed out that all the conditions specified in s. 80-IB(10) of the said Act were duly satisfied by the appellant. But however, the AO disallowed the claim of the appellant under s. 80-IB(10) of the said Act. The appellant preferred an appeal before CIT(A). The CIT(A) ultimately deleted the disallowance by the AO infer alia observing that there was nothing in the Act to suggest that such deduction was available only to the projects to construct apartments or flats and that the absence of common areas cannot disqualify the appellant from claiming the deduction under s. 80-IB(10). It was further observed that the intention of the legislature has been ensured by limiting the size of the residential unit to 1,500 sq. ft. Accordingly, the deduction refused by the AO was ordered to be deleted and the appeal was allowed. Thereafter, the respondent preferred an appeal before the Tribunal. The learned Tribunal after examining the material on record inter alia held that the presence of common area is not a condition in order to qualify for deduction under s. 80-IB(10) of the said Act. Nevertheless, upon inspection of the concerned residential unit came to the conclusion that the row house constructed by the appellant had a courtyard on the rear which also had to be added for computing the said built-up area of 1,500 sq. ft. and as such the appeal filed by the respondent/Revenue was allowed. Being aggrieved by the said order, the appellant preferred the above appeal which was ordered to be considered on the aforesaid substantial questions of law.
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The learned counsel appearing for the appellant dealing with the first substantial question of law has taken us through the provisions of the I.T. Act and pointed out the meaning of the words 'built-up area' as contemplated therein. The learned counsel has pointed out that in order to invite the inclusion of an area as 'built-up area' there should be something built in such area. The learned counsel further pointed out that when the area is open to the sky the question of holding that there is...
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