The Commissioner Of Income Tax – 15, Mumbai v. M/S.tinnwala Industries

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.3315 OF 2010 The Commissioner of Income Tax – 15, Mumbai..Appellant. Versus M/s.Tinnwala Industries..Respondent. Mr.J D Mistri, Senior Advocate with Mr.Atul K Jasani for the appellant.Mrs.S V Bharucha for the respondent. P.C. : CORAM : J.P. Devadhar &A.R. Joshi, JJ. DATE : 13[th] April 2012 1.This appeal was heard along with Income Tax appeal No.3633 of 2009, which was decided on 28[th] March 2012. Since an additional issue is involved in this appeal, the matter was placed for further hearing. Accordingly, this appeal is heard today. 2.The assessment year involved herein is AY 2004-2005. 3.Basically, two questions are raised in this appeal, namely, (a) whether the Income Tax Appellate Tribunal was justified in holding that construction of 'Om Apartment' on a plot of land ad-measuring 6179 square meters at Andheri, Mumbai was a housing project and income therefrom was entitled to deduction under Section 80IB (10) of the Income Tax Act, 1961 even though the said plot was not a vacant plot having minimum area of one acre as contemplated under section 80IB (10) of the Act ? and (b) whether the Income Tax Appellate Tribunal was justified in holding that the area of balcony and rewas are not to be included while computing the built up area of the residential units in a housing project eligible for deduction under Section 80IB (10) of the Act ? 4.As regards the first question is concerned, counsel for the parties state that similar question raised by the Revenue in the case of Commissioner of Income Tax V/s. Vandana Properties, being Income Tax Appeal No.3633 of 2009 has been decided in favour of the assessee on 28[th ]March 2012. Hence, the first question cannot be entertained. 5.As regards the second question is concerned, it is not in dispute that for the first time the Legislature has defined the expression 'built up area' in Section 80IB (10) by introducing clause (a) to Section 80IB (14) by Finance (No.2) Act, 2004 with effect from 1[st] April 2005. The question is, whether the expression 'built up area' defined with effect from 1[st] April 2005 can be applied for the period prior to 1[st] April 2005 ? 6.In the present case, we are concerned for the period prior to 1[st ]April 2005. During that period, the expression ' built up area' in Section 80IB (10) would have to be construed by assigning a meaning as is commonly understood. It is not in dispute that under the Development Control 3itxa3315-10Regulations framed by the Municipal Corporation for Greater Mumbai, the balcony area is required to be excluded while computing the 'built up area'. If the expression 'built up area' in a housing project approved by the local authority does not include the balcony area, then, prior to 1[st] April 2005 the same would apply while considering the eligibility under Section 80IB (10) of the Act. That is why, the Legislature has introduced the definition of 'built up area' by including the balcony area with effect from 1[st] April 2005. In such a case, where the Legislature with effect from a particular date has defined a particular expression by including a meaning which is not ordinarily included in that expression, then, the said definition cannot be applied retrospectively. Therefore, the inclusive definition of the expression 'built up area' introduced with effect from 1[st] April 2005 could not be applied retrospectively and the CESTAT was justified in holding that upto 1[st] April 2005, the expression 'built up area' would exclude the balcony area. 7.The question then to be considered is, whether, the rewas area are liable to be excluded while computing the 'built up area' under Section 80IB (10) of the Act. In our opinion, the said question has become academic because once the balcony area is excluded from the built up area, the total built up area of the respective flat in the housing project in question becomes less than 1000 square feet, which is in consonance with Section 80IB (10). Therefore, without going into the question as to whether, prior to 1[st] April 2005, the rewas area was liable to be excluded from built up area or not, we hold that in the facts of the present case, the CESTAT was justified in holding that the assessee was entitled to Section 80IB (10) deduction. 8. In this view of the matter, we see no merit in the appeal and the same is hereby dismissed with no order as to costs. (A.R. Joshi, J.) (J.P. Devadhar, J.)