Principal Commissioner Of Income Tax, Jaipur-2, Jaipur v. M/S. Ashiana Mangalam Developers

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 67 / 2017 Principal Commissioner of Income Tax, Jaipur-2, Jaipur. ----Appellant Versus M/s. Ashiana Mangalam Developers, 401, 3rd Floor, Apex Mall, LalKothi, Tonk Road, Jaipur. ----RespondentConnected With D.B. Income Tax Appeal No. 73 / 2017 Principal Commissioner of Income Tax, Jaipur-2, Jaipur ----Appellant Versus M/s. Ashiana Mangalam Developers, 401, 3rd Floor, Apex Mall, Lal Kothi, Tonk Road, Jaipur ----Respondent D.B. Income Tax Appeal No. 166 / 2017 Principal Commissioner of Income Tax, Jaipur-2, Jaipur ----Appellant Versus M/s Ashiana Mangalam Developers, 401, 3rd Floor, Apex Mall, Lal Kothi, Tonk Road, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. R.B. Mathur with Mr. Prateek KedawatFor Respondent(s) : Mr. Sanjay Jhanwar with Ms. Archana _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 14/11/2017 1.In all these appeals common question of law and facts areinvolved hence they are decided by this common judgment. 2.By way of these appeals, the appellant has assailed thejudgment and order of the tribunal whereby tribunal has dismissedthe appeal of the department and confirmed the order of CIT(A)and reversed the view taken by AO. 3.This court while admitting the appeals framed followingsubstantial question of law:- 3.1Appeal No.67/2017 admitted on 21.4.2017 “1. Whether on the facts and in thecircumstances of the case and in law theITAT was justified law in upholding theorder of CIT(A) in deleting the addition ofRs. 22360725/- made by the AssessingOfficer on account of disallowance of claimof deduction u/s. 80IB(10) withoutappreciating the fact that the ‘built uparea’ of the villas constructed by theassessee is 1772.81 Sq. Ft. that exceedsthe limit of 1500 Sq. Ft. thereby ignoringthe definition as given in section 80IB(14)(a) of the IT Act 1961.” 3.2Appeal No.73/2017 admitted on 21.4.2017 “Whether on the facts and in thecircumstances of the case and in law theITAT was justified law in upholding theorder of CIT(A) in deleting the addition ofRs.71377130/- made by the AssessingOfficer on account of disallowance of claimof deduction under section 80IB(10)without appreciating the fact that the ‘builtup area’ of the villas constructed by theassessee is 1772.81 Sq. Ft. that exceedsthe limit of 1500 Sq. Ft. thereby ignoring the definition as given in section 80IB(14)(a) of the Income Tax Act, 1961?” 3.3Appeal No.166/2017 admitted on 16.8.2017 “Whether on the facts and in thecircumstances of the case and in law theITAT was justified law in upholding theorder of CIT(A) in deleting the addition ofRs.10043117/- made by the AssessingOfficer on account of disallowance of claimof deduction under section 80IB(10)without appreciating the fact that the ‘builtup area’ of the villas constructed by theassessee is 1620.81 Sq. Ft. that exceedsthe limit of 1500 Sq. Ft. thereby ignoringthe definition as given in section 80IB(14)(a) of the Income Tax Act, 1961?” the definition as given in section 80IB(14)(a) of the Income Tax Act, 1961?” 3.3Appeal No.166/2017 admitted on 16.8.2017 “Whether on the facts and in thecircumstances of the case and in law theITAT was justified law in upholding theorder of CIT(A) in deleting the addition ofRs.10043117/- made by the AssessingOfficer on account of disallowance of claimof deduction under section 80IB(10)without appreciating the fact that the ‘builtup area’ of the villas constructed by theassessee is 1620.81 Sq. Ft. that exceedsthe limit of 1500 Sq. Ft. thereby ignoringthe definition as given in section 80IB(14)(a) of the Income Tax Act, 1961?” 4.The facts of the case are that the assessee was picked up forscrutiny and the assessment was framed under section 143(3) ofthe Income Tax Act, 1961 (hereinafter referred to as the Act) videorder dated 25.03.2013. While framing the assessment, the AOrejected the claim of deduction under section 80IB(10) of the Act,on the ground that the assessee has not fulfilled the basiceligibility condition for deduction u/s 80IB(10) as there is violationof clause (c). The assessee aggrieved by this order, preferredappeal before ld. CIT (A), who after considering the submissionsof the assessee allowed the appeal of the assessee and held thatthe assessee is eligible for deduction under section 80IB(10) ofthe Act. 5.Counsel for the appellant Mr. Mathur has taken us to thedefinition of Section 80IB (10) (iii) of the Income Tax Act, 1961which reads as under:- 80IB(10)(iii) of the Income Tax Act,1961 “in a case where a housing project hasbeen approved by the local authorityon or after the 1st day of April, 2005,within five years from the end of thefinancial year in which the housingproject is approved by the localauthority.” 5.1He has also taken us to the definition of Built up area u/s80IB(10)(14)(a) which reads as under:- “For the purposes of this section,— 1[(a) "built-up area" means the innermeasurements of the residential unitat the floor level, including theprojections and balconies, asincreased by the thickness of thewalls but does not include thecommon areas shared with otherresidential units;“ 5.2He contended that in view of dictionary meaning of “Terrace” appearing in Oxford Dictionary, it is an open gallery, a colonnade,a portico; a balcony, later, a raised platform or balcony in atheater, Auditorium etc. 5.3He has relied upon the decision of Supreme Court inCommissioner of Income Tax-19, Mumbai vs. Sarkar Builders(2015) 7 SCC 579 wherein it has been held as under:- “23. Thereafter, significant amendment, withwhich we are directly concerned, was carriedout by Finance (No. 2) Act, 2004 with effectfrom 1.4.2005. This amendment has alreadybeen noted above. The Legislature madesubstantial changes in Sub-section (10).Several new conditions were incorporated forthe first time, including the condition mentionedinClause(d).Thiscondition/restriction was not on the statutebook earlier when all these projects weresanctioned. Another important amendment wasmade by this Act to Sub-section (14) ofSection 80IB with effect from 1.4.2005 and forthe first time Under Clause (a) thereof thewords'built-uparea'weredefined.Section 80IB(14)(a) reads as under: “80IB.(14) For the purposes of this section- “23. Thereafter, significant amendment, withwhich we are directly concerned, was carriedout by Finance (No. 2) Act, 2004 with effectfrom 1.4.2005. This amendment has alreadybeen noted above. The Legislature madesubstantial changes in Sub-section (10).Several new conditions were incorporated forthe first time, including the condition mentionedinClause(d).Thiscondition/restriction was not on the statutebook earlier when all these projects weresanctioned. Another important amendment wasmade by this Act to Sub-section (14) ofSection 80IB with effect from 1.4.2005 and forthe first time Under Clause (a) thereof thewords'built-uparea'weredefined.Section 80IB(14)(a) reads as under: “80IB.(14) For the purposes of this section- (a) "built-up area" means the innermeasurements of the residential unit at thefloor level, including the projections andbalconies, as increased by the thickness of thewalls but does not include the common areasshared with other residential units;24. Prior to insertion of Section 80IB(14)(a),in many of the rules and Regulations of thelocal authority approving the housing project"built-up area" did not include projections andbalconies. Probably, taking advantage of thisfact, builders provided large balconies andprojections making the residential units farbigger than as stipulated in Section 80IB(10),and yet claimed the deduction under the saidprovision. To plug this lacuna, Clause (a) wasinserted in Section 80IB(14) defining the words"built-up area" to mean the innermeasurements of the residential unit at thefloor level, including the projections andbalconies, as increased by the thickness of thewalls, but did not include the common areasshared with other residential units.” 5.4He contended that decision taken by the tribunal is contraryto law. 5.5He also argued that the decision of Madras High Court inCommissioner of Income Tax, Chennai vs. M/s. Ceebros PropertyDevelopment (P) Ltd. T.C. (A) No.1366/2008 decided on2.11.2012 will not apply in the facts of the case. 5.6Mr. Mathur has contended that in view of provisions ofSection 14A, “Terrace” is equivalent to “balcony” since it isattached to room, therefore, it can be included in the built up areaand no benefit can be granted. 7.Counsel for the respondent Mr. Jhanwar has relied on thefollowing decisions:- 7.1 In Commissioner of Income Tax-IV vs. Amaltas Associates[2016] 389 ITR 175 (Gujarat), it has been held as under :- 5.4He contended that decision taken by the tribunal is contraryto law. 5.5He also argued that the decision of Madras High Court inCommissioner of Income Tax, Chennai vs. M/s. Ceebros PropertyDevelopment (P) Ltd. T.C. (A) No.1366/2008 decided on2.11.2012 will not apply in the facts of the case. 5.6Mr. Mathur has contended that in view of provisions ofSection 14A, “Terrace” is equivalent to “balcony” since it isattached to room, therefore, it can be included in the built up areaand no benefit can be granted. 7.Counsel for the respondent Mr. Jhanwar has relied on thefollowing decisions:- 7.1 In Commissioner of Income Tax-IV vs. Amaltas Associates[2016] 389 ITR 175 (Gujarat), it has been held as under :- 8. Section 80(14) of the Act containsdefinitions for the purpose of the saidsection. Clause-(a) thereof provides thatbuilt-up area means the inner measurementsof the residential unit at the floor level,including the projections and balconies, asincreased by the thickness of the walls, butdoes not include the common areas sharedwith other residential units. Thus, the built-up area would include inner measurementsof a residential unit on the floor level addedby thickness of a wall as also projections andbalconies. This would however, exclude thecommon areas shared with other residentialunits. This exclusion clause of the commonareas shared by other units cannot beapplied in the reverse. In other words, themoment a certain area is not shared but isexclusively assigned for the use of aparticular residential unit holder, would notmean that such area would automatically beincluded in the built-up area. In order to bepart of the built-up area, the same must bepart of the inner measurements of aresidential unit or projection or balcony. Theopen terrace space on the top floor of abuilding would not satisfy this description. Itwill also not be covered in the expressionbalcony. Term 'balcony' has been explained inWebster's Third International Dictionary(Unabridged) as unroofed platform projectingfrom the wall of a building, enclosed by aparapet or railing, and usually resting onbrackets or consoles. It is often used as synonyms to gallery, loggia, veranda, piazza,porch, portico, stoop etc. In the context ofresidential or even commercial complexes,term 'balcony' has gained a definite commonparlance meaning. It usually consists of aprojection from a building covered by aparapet or railing and may or may not butusually is covered from the top. This term'balcony' certainly would not include an openterrace adjoining a bedroom or any otherconstructed area of a penthouse. The terraceis not a projection. 7.2In Commissioner of Income Tax vs. Mahalakshmi Housing [2014] 222 Taxmann 356 (Madras), it has been held as under :- synonyms to gallery, loggia, veranda, piazza,porch, portico, stoop etc. In the context ofresidential or even commercial complexes,term 'balcony' has gained a definite commonparlance meaning. It usually consists of aprojection from a building covered by aparapet or railing and may or may not butusually is covered from the top. This term'balcony' certainly would not include an openterrace adjoining a bedroom or any otherconstructed area of a penthouse. The terraceis not a projection. 7.2In Commissioner of Income Tax vs. Mahalakshmi Housing [2014] 222 Taxmann 356 (Madras), it has been held as under :- 6. As far as the issue in respect of inclusionof open terrace area with the built up area isconcerned, we had already held the saidissue against the Revenue in our decisionrendered in T.C. Nos. 581, 1186 of 2008 and136 of 2009 - Ceebros Hotels Pvt. Ltd. v.Deputy Commissioner of Income Tax dated19.10.2012 and accordingly, the order theTribunal is set aside. The assessee's appealviz., T.C. (A). No. 318 of 2012 stands allowedholding that the open terrace area cannotform part of the built up area, in the result,the assessee would be entitled to deductionunder Section 80-IB(10) of the Act. No costs.of open terrace area with the built up area isconcerned, we had already held the saidissue against the Revenue in our decisionrendered in T.C. Nos. 581, 1186 of 2008 and136 of 2009 - Ceebros Hotels Pvt. Ltd. v.Deputy Commissioner of Income Tax dated19.10.2012 and accordingly, the order theTribunal is set aside. The assessee's appealviz., T.C. (A). No. 318 of 2012 stands allowedholding that the open terrace area cannotform part of the built up area, in the result,the assessee would be entitled to deductionunder Section 80-IB(10) of the Act. No costs. 7.3 In Commonwealth Developers vs. Assistant Commissioner ofIncome Tax [2015] 370 ITR 265 (Bombay), it has been held asunder :- On going through the said provisions, inorder to avail of the deduction the built-uparea of the residential unit cannot exceed1,500 sq. ft. Having regard to the rivalcontentions the only aspect to be examinedis whether the area of the rear courtyardwhich is open to the sky and appurtenant tothe residential unit is to be included tocompute the built-up area as provided unders. 80-IB(10) of the said Act. In order toexamine the situation at loco we called upon the appellant and the respondent to producethe photographs with regard to suchcourtyard area and we have noted that sucharea is an open piece of land thoughenclosed by a compound wall but without anymasonary construction therein. It is alsocontended by the appellant that such areahas not been transferred in favour of theowner of the residential unit. In fact, a copyof the agreement was even produced beforethe learned Tribunal to show that the built-uparea mentioned in the agreement in respectof each villa is 134.83 sq. mtrs, as computedby the architect. In this background, we shallproceed to examine the rival contentions.The built-up area is the carpet area plus thethickness of outer walls and balcony. Thecarpet area of a property is defined as netusable area from the inner side of one wall toanother. The carpet area comprises of carpetarea of the demised premises, toilet areaswithin such demised premises. Thus, it canbe seen that to meet the requirement of anarea to be treated as a 'built-up area' someconstruction has to be in existence in sucharea. The meaning of the words 'building'and 'built-up' as per the Oxford Dictionaryreads thus: 'Building': A structure with a roof and walls.The process or trade of building houses andother structures. 'Built-up': (of an area) densely covered bybuildings. Increased in height by the additionof parts. 8.We have heard counsel for the parties. 9.Before proceeding with the matter, it will not be out of place to mention that the tribunal being the last fact finding authority 'Building': A structure with a roof and walls.The process or trade of building houses andother structures. 'Built-up': (of an area) densely covered bybuildings. Increased in height by the additionof parts. 8.We have heard counsel for the parties. 9.Before proceeding with the matter, it will not be out of place to mention that the tribunal being the last fact finding authority has observed as under:- “3.4. From the decisions of the Madras HighCourt, Bombay High Court and the ITATAhmedabad, discussed above in para 3.3above, it is seen that the area underconsideration cannot be included in the ‘builtup area’ if it is uncovered, open to sky, andwithoutanyconstructiononit, notwithstanding the fact that it is a private,exclusive area of the owner, accessible onlythrough the dwelling unit (bed room) andadjoining to it. In this case, the area underconsideration is the roof of the ground floor,is uncovered, open to sky, and without anyconstruction on it although it is accessibleexclusively to the owner through thebedroom (and not a part of the commonarea). Therefore, following the above caselaws (discussed in pafra 3.3, above), thisprivate, open terrace, cannot be included inthe ‘built up area’ of the residential unit, asdefined in Sec 80IB(14)(a). Therefore, thebuilt up area of the residential units is lessthan 1500 sq. ft. and consequently, theassessee is eligible for deduction u/s80IB(10). These grounds are allowed.” There is no dispute with regard to the factthat the AO rejected the claim of deductionunder section 80IB(10) only on the groundthat a terrace is an entirely open and largespace on the top most level of a building,whereas balconies are relatively smallerareas affixed to a room of the house. Hefurther observed that balconies areaccessible only through the room that theyare attached with and terraces will usuallyhave independent entrances. The assesseehas demonstrated from the pictures of thebuilding that the area is a terrace as it iscompletely open and is a roof of a roomunderneath. Merely because the first floorrooms of villa has an opening on the terrace,in our considered view would not make theterrace as a balcony as the balcony normallyis attached with the rooms and covered byenclosure but it is not supported by the wallsof the room underneath. We find that theCoordinate Bench under the identical facts inITA No. 12/Kol/2014 in the case of M/s.Ashina Amar Developers vs. ITO afterconsidering the case law and provisions ofsection 80IB has decided the issue byobserving as under :- “4.2.1. We find that the Learned AO duringthe course of assessment proceedings askedthe assessee inter alia to submit before himthe copies of brochure issued by theassessee to the prospective buyers foreffecting the sale of residential units during “4.2.1. We find that the Learned AO duringthe course of assessment proceedings askedthe assessee inter alia to submit before himthe copies of brochure issued by theassessee to the prospective buyers foreffecting the sale of residential units during the asst year under appeal. The assesseeduly made available the copies of thebrochure issued in order to attractprospective buyers and also copies of originalsale deeds before the Learned AO which wereduly returned by the Learned AO afterverification. We find that the Learned AOcalculated the super built up area of eachbuilding based on the brochures by includingthe area of open terrace and therefromestimated the built up area by taking 90% ofthe super built up area of each building asbuilt up area. We find that the Learned AObrushed aside the argument of the assesseethat the brochures are only indicative innature and the actuals may vary from whatis stated in the brochures. The assessee alsotried to explain that as per the sale deedwhich was registered with Registrar forstamp duty purposes, the total built up areaof each building was below the maximumarea specified in section 80IB(10) of the Act.The Learned AO simply ignored the saledeeds that were produced before him andplaced reliance on the brochures issued bythe assessee to attract prospective buyersand estimated the built up area by includingthe terrace area. We find that the actual builtup area of residential building should notexceed the maximum area specified in theAct and there is no scope for making theassumptions and estimates. 4.2.2. Reliance is placed on the co-ordinatebench decision of Mumbai Tribunal in thecase of ACIT vs Sheth Developers reported in33 SOT 277 (Mum)wherein it was held thatthe built up area has to be calculated on anactual basis and not on the basis ofestimates. In that case, the AO relied on aratio worked out from the map attached withthe occupancy certificate, for arriving at thebuilt up area from the carpet area which wasturned down by the Tribunal. 4.2.3. We also find lot of force in thealternative arguments of the Learned AR thatthe term ‘terrace’ is not defined in the Act.However the word ‘terrace’ originates from aFrench term and is known as terrasse,terrazzo in Italian and spelled as terraza inSpanish. This is an outdoor extension thatcan be occupied by lots of people and is beyond ground level. A terrace has morespace and with an open-top. We find that thedefinition of built up area means innermeasurement of the residential unit at thefloor level including the projections andbalconies as increased by the thickness ofthe walls but does not include the commonareas shared with other residential units.Hence it could be concluded that the openterrace is not covered within the meaning ofbuilt up area as it is open to sky and wouldnot be part of the inner measurement of theresidential floor at any floor level. Reliance inthis regard is made on the decision of the co-ordinate bench of Ahmedabad Tribunal in thecase of Amaltas Associates vs ITO reported in131 ITD 142 (AHD.) wherein it was held thatthe definition of built up area is inclusive ofbalcony but not open terrace. It further heldthat DVO has considered the open terrace asanalogous to balcony/ verandah without anybasis. Therefore, it took the view that theauthorities below were not justified in takingthe open terrace as balcony / verandahrejecting the claim of the assessee. 4.2.4. Reliance in this regard is placed on thedecision of Hon’ble Madras High Court in thecase of CIT vs M/s Mahalakshmi Housing inTax Case (Appeal) Nos. 583 & 584 of 2011and 316 & 317 of 2012 dated 2.11.2012,wherein the questions raised before theirLordships and the decision rendered thereonare as under:- 4.2.4. Reliance in this regard is placed on thedecision of Hon’ble Madras High Court in thecase of CIT vs M/s Mahalakshmi Housing inTax Case (Appeal) Nos. 583 & 584 of 2011and 316 & 317 of 2012 dated 2.11.2012,wherein the questions raised before theirLordships and the decision rendered thereonare as under:- Whether on the facts and circumstances ofthe case, the Appellate Tribunal is right in lawin holding that the private terrace areashould be included in the built up area of theflats for the purpose of making out statutoryextent of built up area as per Clause (a) ofSection 80IB(14) of the Income Tax Act ?Held: 5. It is seen from the facts narrated hereinthat the assessee is engaged in the businessof construction. The assessee entered into anagreement of sale with one Ashok Kumar forjoint development of the property. Theassessee's claim for deduction under Section80IB(10) of the Income Tax Act is rejectedon the ground that the assessee was not theowner of the land. Aggrieved by the same, the assessee went on appeal before theCommissioner of Income Tax (Appeals), whodismissed the appeal. Aggrieved by thesame, the assessee went on further appealbefore the Income Tax Appellate Tribunal. 6. The Tribunal considered the assessee'sappeal along with two other assessees'appeals involving similar questions of lawand passed a common order. One suchassessee's case came up for consideration inT.C.Nos.581, 1186 of 2008 and 136 of 2009in the case of Ceebros Hotels P\It. Ltd. Vs.Deputy Commissioner of Income "Tax. 8yjudgment dated 19.10.2012, this Courtallowed the assessee's appeal, holding thatthe open terrace area cannot form part of thebuilt up area; in the result, the assesseewould be entitled to deduction under Section80-IB(10) of the Act and that the assesseewould be entitled to proportionate relief asregards the units having built up area notmore than 1500 sq.ft. 7. Even though learned standing counsel forthe Revenue raised additional groundsregarding the principle of proportionality forgrant of relief, yet, we find by reason ofexclusion of open terrace are from the builtup area, application of proportionality theorydoes not arise. In the circumstances, we findno justifiable ground to accept the plea of theRevenue on this aspect. 8. As far as the Revenue’s contention that forthe purpose of Section 80-IB(10} deduction,the assessee should have owned theproperty is concerned, the same is liable tobe rejected by reason of our decisionrendered in T.C.Nos. 581, 1186 of 2008 and136 of 2009 – CEEBROS HOTELS PVT LTD v.DEPUTY COMMISSIONER OF INCOME TAXdated 19,10.2012. Hence, the appeals filedby the Revenue viz., T.C. (A). Nos. 583 and584 of 2011 stands dismissed and thisportion of the Tribunal's order standsconfirmed. The assessee's appeals inT.C.Nos.316 and 317 of 2012 stand allowed,holding that the terrace area . No costs.” 4.2.5. Reliance is also placed on the decisionof the co-ordinate bench decision of PuneTribunal in the case of Shri Naresh T. Wadhwani vs DCIT in ITA No.s 18, 19 & 20/PN/2013 for Asst Years 2007-08,2008-09 &2009-10 dated 28.10.2014, wherein it washeld that :-“ 4.2.5. Reliance is also placed on the decisionof the co-ordinate bench decision of PuneTribunal in the case of Shri Naresh T. Wadhwani vs DCIT in ITA No.s 18, 19 & 20/PN/2013 for Asst Years 2007-08,2008-09 &2009-10 dated 28.10.2014, wherein it washeld that :-“ 18. A bare perusal of the aforesaid questionof law before the Hon'ble Madras High Courtwould reveal that the issue related towhether open space of the terrace would fallwithin the expression 'built-up area'. Thefacts before the Hon'ble High Court were thatassessee had constructed various apartmentblocks and each block had 64 apartments.The apartments located at first to sixth floorwere of areas less than 1500 sq.ft.. However,the flats located on the 7th floor had theadvantage of exclusive open terrace. Whileconsidering the relief u/s 801B(10) of theAct, the Assessing Officer took intoconsiderationtheareaofsuchexclusive/private open terrace as a part ofthe built-up area of the units located at the7th floor. After considering the above aspect,the built-up area of the flats located at the7th floor exceeded 1500 sq.ft. and hence theAssessing Officer held that the conditionprescribed in clause (c) of section 8018(10)of the Act was not fulfilled. The said positiontaken by the Assessing Officer was upheldright up to the Tribunal. However, the Hon'bleHigh Court disagreed with the stand of theRevenue and held that such open terracewould not be includible in the calculation of'built-up area' for the purpose of examiningthe condition prescribed in clause (c) ofsection 8018(10) of the Act. In this view ofthe matter, the aforesaid judgement of theHon'ble Madras High Court and which hasbeen further affirmed in a subsequentdecision in the case of Sanghvi and DoshiEnterprise (supra), covers the issue beforeus. 19. However, in the course of hearing, thelearned CIT -OR attempted to distinguish thejudgement of the Hon'ble High Court bypointing out that the same related toassessment year 2003-04, a period duringwhich the definition of 'builtup area'contained in section 801B(14)(a) of the Actwas not on the statute and also the fact thatthe housing project under consideration ofthe Hon'ble High Court was approved by the concerned local authority prior to 01.04.2005i.e. prior to the date when the definition of'built-up area' was brought on the statute byway of section 80IB(14)(a) of the Act. 20. We have carefully perused the judgementof the Hon'ble Madras High Court and findthat though the Hon'ble High Court wasconsidering a project approved prior to01.04.2005 yet it has taken intoconsideration the definition of 'built-up area'contained in section 801B(14)(a) of the Act,which was inserted w.e.f. 01.04.2005. As perthe Hon'ble High Court even after assumingthat such definition was to be retrospectivelyapplied yet the area of open terrace wouldnot fall within the meaning of the expression'built-up area'. The Hon'ble High Courtreferred to the Indian Standard Method ofMeasurement of Plinth, Carpet and RentableAreas of Buildings as issued of Bureau ofIndian Standards and also the meaning ofthe aforesaid expression assigned as per therules and regulations of the local authorityand concluded that an open terrace could notbe equated to a 'projection' or 'balcony'referred to in section 80IB(14)(a) of the Act. 21. Notably, the Hon'ble High Court alsoconsidered an argument from the side of theRevenue to the effect that the sale of thearea of open terrace by the assessee to therespective purchaser would justify theinclusion of such terrace area into thecalculation of 'built-up area'. Before us also,the learned CIT-DR has raised the said issuethough she has fairly conceded that such afinding was not emerging from the orders ofthe lower authorities. Be that as it may, theHon'ble High Court has noted and dealt withthe said argument in the following words ;- 21. Notably, the Hon'ble High Court alsoconsidered an argument from the side of theRevenue to the effect that the sale of thearea of open terrace by the assessee to therespective purchaser would justify theinclusion of such terrace area into thecalculation of 'built-up area'. Before us also,the learned CIT-DR has raised the said issuethough she has fairly conceded that such afinding was not emerging from the orders ofthe lower authorities. Be that as it may, theHon'ble High Court has noted and dealt withthe said argument in the following words ;- '29. Thus, in the face of terrace being anopen area, not being a projection and hence,not included in the plinth area, the questionherein is as to whether the Tribunal isjustified in confirming the order ofassessment to include the terrace area intothe built-up area solely by reason of the factthat the assessee had sold it to purchasers ofthe 7th floor as a private terrace. 30. We do not think, the Tribunal is justifiedin taking the view that open terrace wouldform part of the built-up area for the purposeof sub-clause (c) of section 80-IB(10). Asalready seen in the preceding paragraphs, anassessee having an Approved Plan projectalone has the right to claim deduction undersection 80-IB. Any project undertaken notapproved by the Local Authority is outsidethe purview of the Act. Thus, when a LocalAuthority, endowed with the jurisdiction togrant the approval is guided in its approvalby Regulation as to what constitutes theplinth area, which is the built-up area, it isdifficult for us to agree with the contention ofthe Revenue as well as the reasoning of theTribunal that for the purpose of consideringthe claim under section 80-IB, the built-uparea would be different from what has beengiven approval by the Local Authority, on abuilding project. Given the fact that during2003-04 there was no definition at all onwhat a built-up area is, the understanding ofthe Revenue, which is evidently contrary tothe approval of the Local Authority based onthe Rules and Regulations could not besustained. Consequently, we have nohesitation in agreeing with the assessee'scontention that open terrace area, even if beprivate terrace cannot form part of the built-up area” 22. As per the Hon'ble High Court, terracearea would not form part of the built-up areaby the reason of the fact that assessee sold itto the purchaser as a private terrace. At thisstage, we may also point out that there isnothing in section 80IB(14)(a) of the Act tosuggest that the factum of the terrace beingavailable for exclusive use of the respectiveunit owner is a ground to consider it as apart of 'built-up area' for the purposes ofclause (c) of section 80IB(10) of the Act.Thus, the argument of the learned CIT-OR ishereby rejected. 23. In view of the aforesaid judgement of theHon'ble Madras High Court, we are unable touphold the stand of the Assessing Officer toinclude area of terrace as a part of the 'built-up area' in a case where such terrace is aprojection attached to the residential unitand there being no room under such terrace, even if the same is available exclusively foruse of the respective unit- holders.” 10.Even the judgment of Gujarat High Court in AmaltasAssociates (supra) is very clear and in our considered opinion evenafter amendment the legislature has included the balcony andprojection but not the “Terrace”. 11.In our considered opinion, the terrace is to cover the roomwhich is available on the ground floor therefore, terrace isdifferent then balcony which is provided in addition to the facilitieswhereas terrace goes with the projection of the room. 12.Taking into consideration the aforesaid, the issue is requiredto be answered in favour of the assessee and against thedepartment. 13.The appeals stand dismissed. (VIJAY KUMAR VYAS)J. (K.S. JHAVERI)J. Bmg 81-83.