AGNI ESTATES AND FOUNDATION PVT LTD.,CHENNAI vs. DCIT, CHENNAI

All the three appeals of the assessee are directed against the respective orders of the Commissioner of Income Tax (Appeals)-1, Chennai, and pertain to assessment years 2010-11 and 2012-13. Since common issue arises for consideration in all the three appeals, we heard these appeals together and disposing of the same by this common order.

There was a delay of 376 days in filing the appeal in I.T.A.

Sh. Vikram Vijayaraghavan, the Ld.counsel for the assessee, submitted that is arising out of the order passed by the CIT(Appeals) under Section 154 of the Income-tax Act, 1961 (in short 'the Act'). Other two appeals are regular appeals. According to the Ld. counsel, the assessee claimed deduction under Section 80-IB(10) of the Act in respect of housing project. The Assessing Officer rejected the claim of the assessee for both the assessment years on the ground that the built-up area exceeded the prescribed limit of 1500 sq.ft. Referring to the order of the CIT(Appeals), more particularly page 5 for assessment year 2010-11, the Ld.counsel submitted that the built-up area is 1316 sq.ft. in one block of villas and another block of villas it is 1191 sq.ft.

On the contrary, Shri Asish Tripathy, the Ld. Departmental Representative, submitted that the assessee undertook three projects. In respect of Selaiyur and Pallikaranai projects, the CIT(Appeals) allowed the claim of the assessee under Section 80- IB(10) of the Act. However, in respect of Porur project, according to the Ld. D.R., the CIT(Appeals) directed the Assessing Officer to re- examine the matter and thereafter decide the same as per his direction. According to the Ld. D.R., the built-up area exceeded 1500 sq.ft. in respect of Porur project, therefore, the CIT(Appeals) has rightly directed the Assessing Officer to verify the same.

We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee is in the business of civil construction. The assessee promoted housing projects in Selaiyur, Pallikaranai and Porur. In respect of Selaiyur and Pallikaranai projects, the CIT(Appeals) allowed the claim of the assessee under Section 80-IB(10) of the Act for the assessment year 2010-11. For the assessment year 2012-13, the only issue is in respect of claim of deduction under Section 80-IB(10) of the Act in respect of Porur project. In the Porur project, the CIT(Appeals), for assessment year 2012-13, found that the built-up area exceeded 1500 sq.ft., therefore, the assessee is not eligible for deduction under Section 80-IB(10) of the Act. However, for assessment year 2010-11, the CIT(Appeals) found that the matter needs to be re-examined. Accordingly, he directed the Assessing Officer for re-examination of the issue.

The question arises for consideration is whether the assessee constructed residential unit exceeding 1500 sq.ft. as claimed by the Revenue? The Madras High Court in Subba Reddy (HUF) (supra) examined this issue and after referring to sub-clause (14) of Section 80-IB of the Act, found that the definition for “built-up area” as provided in Section 80-IB(14) of the Act, came into effect from 01.04.2005. Moreover, common area and facilities are defined in Tamil Nadu Apartment Ownership Act, 1994. The High Court further found that as per Tamil Nadu Apartment Ownership Act, 1994, basement, cellars, yards, gardens, parking areas and storage spaces are all common areas. In view of the above, the definition as provided in Section 80-IB(14) of the Act, which is applicable from 01.04.2005, the Assessing Officer has to re-examine the matter in the light of the planning permission granted by the competent authority under Tamil Nadu Town and Country Planning Act and also actual construction made by the assessee. Accordingly, orders of both the authorities below are set aside and the issue of claim of deduction in respect of Porur project is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter afresh in the light of the material that may be filed by the assessee and thereafter decide the same in the light of judgment of Madras High Court in Subba Reddy (HUF) (supra). It is also made clear that the Assessing Officer is at liberty to refer the matter to Valuation Officer to find out the actual built-up area, if necessary.

With the above observation, all the appeals of the assessee are allowed for statistical purposes.