S. 80IB(10) -Canopy/ Porch cannot be treated as part of Built up Area as it is not habitable

By TG Team Income Tax Judiciary October 30, 2015

TaxGuru Citation: 2015 taxguru.in 1387
Case Name: DCIT Vs Smt. Suman Jagannath Pharande (ITAT Pune)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2006-07 to 2009-10
Courts: All ITAT, ITAT Pune

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Brief Facts and Question of Law:

Brief Facts of the Assessee:

The Assessee is engaged in the business of construction and had undertaken a residential cum commercial project in Nanded. In assessment year 2008-09, the assessee had claimed deduction under section 80IB(10) of the Act at Rs.45,40,947/-. The Assessing officer (herewith “AO”) rejected the Assessee’s claim of deduction on the ground that the project included residential as well as commercial units. Also the project was not completed within the time limit specified in the provisions of section 80IB(10) of the Act. The area of some of the residential units exceeded 1500 sq. ft. Since the assessee had failed to comply with the provisions of section 80IB(10) of the Act, the claim of deduction was denied to the assessee.

Held by CIT (A):

The CIT(A) accepted the Assessee’s contentions and allowed the deduction u/s 80IB(10) of the Act.

Question of Law:

Whether, Canopy/porch area can be included in the definition of Built up Area u/s 80IB(10)(14)(a) of the Act?

Contention of the Revenue:

The Revenue contented that as per Survey reports, the assessee was conducting the construction activity on a single project which was a commercial cum residential project. Such project was not eligible for deduction u/s 80IB(10) of the Act.
It was also contented that as per the audit report submitted by the assessee, the project had commenced construction on 21.03.2004 while the Certificate for the project was given on 15.05.2004. Since the assessee had already started incurring expenses for development the commencement date was considered as 21.03.2004 and hence, the project was supposed to be completed before 31.03.2008. However, during the course of Survey some units were not completed as on 09.12.2008.
Also some of the units exceeded the specified limit of 1500 sq ft. after including the canopy/porch area which was a part of built up area of the unit. Hence, the Assessee violated the provisions of section 80IB(10) and hence no deduction was allowed.

Contention of the Assessee: