Tax Case (Appeal) v. Shri.c.subba Reddy (Huf),'Sukriti'

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 11.9.2020 CORAM THE HON'BLE DR.JUSTICE VINEET KOTHARIANDTHE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY Tax Case (Appeal) No.314 of 2011 Commissioner of Income Tax,Chennai.Appellant Vs. Shri.C.Subba Reddy (HUF),'Sukriti', 19/1, 3rd Cross Street,R.A.Puram, Chennai 600 028. Respondent Tax Case (Appeal) filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax AppellateTribunal, 'A' Bench, Chennai, dated 10.12.2010 made in ITANo.1907/Mds/2008. Appeal against the order dated 31.03.2008 madein ITA.No.142/07-08 on the file of the Commissioner of IncomeTax (Appeals)-VI, Chennai-34 for the Assessment year 2005-06 &as against the order dated 05.12.2007 made in PAN: onthe file of the Assistant Commissioner of Income Tax, Circle II,Chennai 600 034 for the Assessment year 2005-06. For Appellant : Mr.T.Ravikumar Senior Standing Counsel & Mrs.R.Hemalatha, Senior Standing Counsel For Respondent : Mr.S.Sridhar The Revenue has filed this Tax Case under Section 260-A ofthe Income Tax Act by raising the following purportedsubstantial question of law arising from the order passed by theIncome Tax Appellate Tribunal on 10.12.2010 for the AssessmentYear 2005-2006:- "Whether on the facts and circumstances of the case,the Tribunal was right in holding that the assesseeis entitled for deduction under Section 80IB?" https://hcservices.ecourts.gov.in/hcservices/ 2. Heard Mr.T.Ravikumar and Mrs.R.Hemalatha, learned SeniorStanding Counsels appearing for the Appellant/Revenue andMr.S.Sridhar,learnedcounselappearingfortheRespondent/Revenue. 3. The issue involved in the present Appeal filed by theRevenue is squarely covered by the Judgment of a co-ordinateBench of this court in the Assessee's own case for the precedingAssessment Year 2004-2005. 4. The question of law raised before us in the presentAppeal filed by the Revenue is about the entitlement of theAssessee to get deduction under Section 80IB of the Act. 5. The relevant findings of the learned Tribunal in theimpugned order dated 10.12.2010 are quoted below for readyreference:- "The other issue raised in this appeal isregarding benefit of section 80-IB(10) givenregarding car parking area sold to the flat ownerswhich according to Revenue does not form part ofthe built-up area for the purpose of verifying thepermissible limit of 1500 sq.ft prescribed in thesection. The case of the Revenue is that coveredCar parking allotted to buyers is only forregulating parking in the complex and to avoidconfusion in parking. As the car parking area isnot a deemed place and it is only a common amenityprovided to buyers in the complex in which CMDA,i.e. the planning authority, does not consider thecar parking for Floor Space Index (FSI) of thebuilding. It was also argued that under Tamil NaduApartments Act, only parking area is defined as a‘common amenity’. In our opinion, the ld. CIT(Appeals) has correctly held that built-up area isonly the inner measurement of the residentialunits at the floor level plus projections andbalconies plus thickness of the walls. But, thecar parking area is not a living space and it is acommon area which can be accessed by anyone sinceit has no boundary wall. The Tamil NaduApartments Ownership Act defines the same and thisdefinition takes the same out of the purview ofthe built-up area. Undeniably, the car parkingarea is allotted and belonged to buyers alone. Itcannot be said to be a private area and has to betreated as common area and has to be excluded fromthe calculation of built-up residential unitsparticularly keeping in view the agreements andthe Tamil Nadu Apartments’ Ownership Act. Consequently, we dismiss this ground also." 6. The relevant portion from the Judgement of the co-ordinate Bench of this court in CIT v. Subba Reddy (HUF) (373ITR 105) is also quoted below for ready reference:- Consequently, we dismiss this ground also." 6. The relevant portion from the Judgement of the co-ordinate Bench of this court in CIT v. Subba Reddy (HUF) (373ITR 105) is also quoted below for ready reference:- "12. It is seen that car park has been separatelyshown in the agreement and according to the assessee,the same does not form part of the residential unitfor the purpose of determining the maximum built-uparea, in view of the definition for the term 'built-uparea' came into effect from 01.04.2005. TheCommissioner of Income Tax (Appeals) relied upon theprovisions of the Tamil Nadu Apartment Ownership Act,1994 , wherein Section 3(h) defines the term 'commonareas and facilities' in which clause 3 states thatthe basements, cellars, yards, gardens, parking areasand storage spaces are common areas. Hence, followingthe said provision, the Commissioner of Income Tax(Appeals) allowed deduction. 13. In the absence of any specific definition forthe term 'built-up area' during the relevant period,the reasoning of the Commissioner of Income Tax(Appeals), which was confirmed by the Tribunal isjustified. Nevertheless, we find that Section 80IB(10)of the Income Tax Act speaks about the residentialunit having a maximum built-up area of 1500 sq.ft. toclaim deduction. Even in the definition under Section80IB(14)(a), which came into effect from 01.04.2005,"builtup area" was defined as inner measurements ofthe residential unit at the floor level, including theprojections and balconies, as increased by thethickness of the walls, meaning thereby, the actualresidential portion of the property. It, however,clearly states that it will not include common areashared with other residential units. Hence, thedefinition under Section 80IB(14)(a), could, at best,throw some light as to how the built-up area of theresidential unit should be computed for the purpose ofdetermining deduction under Section 80IB(10) of theIncome Tax Act. 14. From a reading of the above-said provisions,we find that there is no justification in includingthe car park in the definition of the built-up area ofthe residential unit for the purpose of determiningthe maximum built-up area. In such view of the matter,we are inclined to accept the reasoning of theCommissioner of Income Tax (Appeals) drawing supportfrom the Tamil Nadu Apartment Ownership Act, 1994,which was confirmed by the Tribunal. Accordingly, the second substantial question of law is answered againstthe Revenue and in favour of the assessee." 7. In view of the fact that the matter is covered by thedecision of the co-ordinate Bench of this court, the presentAppeal is disposed of in terms of the decision of the co-ordinate Bench holding that the Assessee is entitled to thebenefit of deduction under Section 80IB of the Act.Accordingly, the Appeal filed the Revenue is liable to bedismissed and the same is hereby dismissed. The question of lawis answered in favour of the Assessee and against the Revenue. Sd/- Assistant Registrar /true copy/Sub Asst. Registrar sskTo1.The Income Tax Appellate TribunalA Bench Chennai 2.The Commissioner of Income Tax (Appeals)VI,Chennai-34 3.The Assistant Commissioner of Income Tax,Circle -II, Chennai 600 034 +1 cc to Mr.T.Ravikumar Advocate sr29965 T.C.(A) No.314 of 2011 aa20/10/2020 https://hcservices.ecourts.gov.in/hcservices/