Flower Bed Area Cannot Be Included in Built-Up Area for Section 80IB(10) Deduction: Bombay HC

PCIT Vs Nahar Enterprises (Bombay High Court)

Flower Bed, Service Area and Window Projections Excluded From Built-Up Area for Section 80IB(10) Deduction: Bombay HC

Summary: The Bombay High Court dismissed the Revenue’s appeal for AY 2010-11 and upheld the assessee’s eligibility for deduction under section 80IB(10) of the Income-tax Act, 1961. The dispute concerned whether flower-bed areas, service ducts, window areas/window projections and cupboard projections should be included in the 1,000 sq. ft. built-up-area limit applicable to residential units. The Court agreed with the ITAT that a flower bed situated outside the balcony, open to the sky, below the floor level and not capable of being used as a habitable part of the flat could not form part of the “inner measurements of the residential unit at the floor level” under section 80IB(14)(a). It further upheld exclusion of cupboard projections because the relevant area was already covered within wall thickness; service areas because they were common ducts used for pipes and repairs and not for the flat purchaser’s use; and window projections because they were ornamental, unsafe and located above floor level. The Court held that the Revenue’s questions on these issues raised no substantial question of law. As the deduction was sustained on merits, the Court left open the questions concerning the validity of the search warrant and assessment in the name of the dissolved partnership firm. The question concerning part completion of the project did not arise in AY 2010-11.