Floor Bed Area Open to sky and Balcony Area below Floor level doesn't form part of Constructed Area, Deduction u/s 80IB(10) shall be allowed: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the floor bed area open to the sky and balcony area below the floor level doesn’t form part of the constructed area and shall be allowed as a deduction under Section 80IB(10) of the Income Tax Act, 1961.

The assessee company is in the business of a developer of residential and commercial construction. During the years under consideration the assessee company has filed its return of income claiming a deduction to the tune of Rs.1,16,16,45,271/-, Rs.87,14, 45,981/-, Rs.32,20,39,665/-, Rs.56,93,52,096/- & Rs.20,59,34,431/- under Section 80IB(10) of the Income Tax Act.

Notices under Sections 143(2) & 142(1) of the Income Tax Act along with a questionnaire were issued. The assessee filed requisite details/explanations before the Assessing Officer (AO). Declining the contentions/explanations made by the assessee company the AO proceeded to disallow the part claim of deduction claimed by the assessee under Section 80IB(10) of the Income Tax Act by making disallowance of Rs.15,49,88,543/-, Rs,5,00,000/-, Rs.2,27,11,842/-, Rs.15,05,07,574/- & Rs.77,80,000/-.

The Commissioner of Income Tax (Appeal) [CIT(A)] has deleted the disallowance made by the AO. Therefore, the revenue is in appeal before the tribunal.

The Authorised Representatives of the parties to the appeal, perused the orders passed by the Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.

The Two-member bench comprising of Kuldip Singh (Judicial member) and Gagan Goyal (Accountant member) held that “the Tribunal has already decided the issue by holding that while calculating the eligible limit of 1000 sq. ft. for the purpose of deciding the allowability of deduction claimed by the assessee under Section 80IB(10) of the Income Tax Act, the floor bed area, which was open to the sky and not covered by any sides and outside the balcony area, which was below the floor level cannot form part of the constructed area of the flat”.

The bench found no illegality, infirmity, or perversity in the impugned orders passed by the CIT(A) that allowed the deductions claimed by the assessee under Section 80IB(10) of the Income Tax Act. Thus, the appeal of the revenue was dismissed.

To Read the full text of the Order CLICK HERE

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