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Income Tax Appellate Tribunal, “SMC - C” BENCH : BANGALORE
Before: SHRI VIJAY PAL RAO
O R D E R
Per Vijay Pal Rao, Judicial Member
This appeal by the assessee is directed against the order dated: 11.08.2016 of CIT(A) for the assessment year 2006-07. The assessee has raised the following grounds.
The assessee is a company and engaged in the business of land development and construction of dwelling houses. The assessee has filed his return of income for the year under consideration on 30.11.2006 and claimed deduction u/s. 80IB(10) of the Act. The Assessing Officer has denied the claim of deduction u/s. 80IB(10) on the ground that the Page 4 of 9 size of the housing unit is exceeding 1,500 sq.ft., the limit specified under the provisions of section 80IB(10). The assessee challenged the action of the AO before the CIT(A), however could not succeed. Before the tribunal, the ld. AR of the assessee has submitted that the AO took the built up area of the housing unit as per the brochure issued by the assessee without measuring the actual built up area. He has also referred section 80IB(14)(a) of the Act and submitted that as per the definition of the built up area, the common area is required to be excluded for this purpose. He has referred to the details of the built up area, common area as given in the statement of details at page 8 to 10 of Paper Book and contented that the AO has taken the built up area as total area which includes the common area. Whereas as per the provisions of section 80IB(14)(a) the common area has to be excluded for this purpose. He has further contented that some of the units are shown as having more area because of the fact that two separate units were merged. However those were sold vide separate sale deeds. Thus, the ld. AR has submitted that when the two units were shown separately then the same should be taken independent units and should not be clubbed together for the purpose of measuring the built up area of each unit. He has further contented that in some of the units at the ground floor, the AO has taken into consideration the private garden area as part of the built up area and Page 5 of 9 therefore the entire measurement of the area was wrongly taken into consideration by the AO. The garden area of the unit has only user right of the owner of the unit and no ownership was given to the purchaser. He has relied upon the decision dated: 17.11.2015 of the Hon’ble jurisdictional High Court in the case of M/s. Rajeshwari Cotton Ginning and Pressing Industries Vs. ACIT in & ITA Nos. 840- 841/2009 as well as in the case of CIT Vs G.R. Developers 353 ITR 1 (Karn). The ld. AR has further pointed out that for the assessment year 2007-08 the AO has accepted the claim of deduction u/s. 80IB(10). Alternatively, the ld. AR has contented that even in case some units are found to be exceeding the area of 1,500 sq.ft. only on the proportionate disallowance of deduction u/s. 80IB(10) has to be considered.
On the other hand, the ld. AR has submitted that residential units in question were inspected and measured by the architect of the assessee and in the presence of the assessee. Therefore, the finding of the AO is based on the facts as per the measurement carried out at the site. He has further contented that the AO has categorically stated in the assessment order that when this point was confronted to the assessee, the assessee withdrawn the claim of deduction u/s. 80IB(10) and filed a revised return. The assessment has been framed by the AO on the basis of the Page 6 of 9 revised return. Therefore no fault can be found in the assessment framed by the AO on the basis of the revised return. The CIT(A) has also taken into consideration the facts as recorded by the AO that the size of the flats was found more than 1,500 sq.ft. during the inspection and measurement carried out by the architect of the assessee and consequently the assessee withdrew the claim of deduction u/s. 80IB(10). He has relied upon the orders of the authorities below.
Having considered the rival submissions and relevant material on record, it is noted that the Assessing Officer has pointed out that various residential flats in the project were exceeding the built up area limit of 1,500 sq.ft. as provided u/s. 80IB(10). When this fact was confronted with the assessee, the assessee filed a revised return of income and withdrew the claim. Accordingly, the AO has framed the assessment on the basis of the revised return and there was no question of denial of claim of deduction u/s. 80IB(10). The assessee raised this issue before the CIT(A), however, the CIT(A) has denied the claim of deduction u/s. 80IB(10) by taking note of the fact that the assessee himself has withdrawn this claim by filing the revised return. Therefore, the assessee has reiterated his claim of deduction u/s. 80IB(10) and asserted that the area of these flats was wrongly taken by the AO without excluding the Page 7 of 9 common area. There is no bar of raising the fresh plea or making claim at the appellate stage however, if the claim of the assessee is based on the facts which are required to be investigated then this rule of raising the fresh plea before the appellate authority as held by the Hon’ble Supreme Court in the case of NTPC Vs CIT 229 ITR 383 is not applicable. In the case in hand it is undisputed that the AO has pointed out to the assessee that the area of the flats in the projects are exceeding 1,500 sq.ft. and therefore the assessee’s claim is not allowable upon which the assessee had withdrawn his claim by filing a revised return. Since the revised return was filed within the period of limitation and it was a valid return of income therefore, the Assessing Officer has framed the assessment on the basis of revised return. Thus, it is clear that the AO has not proceeded further to verify and counter the claim of the assessee on the issue of built up area of dwelling units. This issue is not a pure legal issue but it involves the question of facts to be verified and then only the legal provisions are to be applied. There is no quarrel on the legal provisions that as per section 80IB(14)(a) the common area of the projects are to be excluded for the purpose of considering the built up area. However, by applying the said provisions of the Act, the actual built up area is required to be measured and verified. The assessee himself has accepted the objections of the AO during the assessment
Page 8 of 9 proceedings. Therefore this claim of the assessee raised before the CIT(A) as well as this tribunal cannot be accepted. As regards the assessment year 2007-08 is concerned it is noted that the AO has not given any finding on this issue and therefore it is not a case that the AO has carried out any exercise of measuring the built up area of the flats in question. In view of the above facts and circumstances of the case, no fault can be found in the orders of the authorities below. The decision relied upon by the ld. AR can be applied only when the issue is denied by applying the provisions of the law and not on the basis of the actual area found to be more than the limit prescribed under the provisions.
In the result the appeal of the assessee is dismissed.
Pronounced in the open court on this 15th day of March, 2017