Section 80-IB(10) deduction allowed where developer lacked land title and had not fully utilised permissible FSI.

Deduction under section 80-IB(10) was held to depend on whether the assessee undertook and executed an approved housing project within the statutory conditions; legal ownership of the land was not treated as an implied prerequisite. The assessee was regarded as the developer because it had possession, control, development rights, responsibility for permissions, construction, marketing, and completion, even though title and municipal approval stood in the landowners' names. The deduction was also not to be curtailed merely because the entire permissible FSI was not utilised, since the provision does not require full exhaustion of FSI and the profits remained derived from the eligible housing project.

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Issues: (i) Whether deduction under section 80-IB(10) of the Income-tax Act, 1961 could be denied on the ground that the assessee was not the legal owner of the land and the approval of the housing project stood in the landowners' names. (ii) Whether the deduction could be curtailed or denied on the footing that there was alleged unutilized FSI or profit from sale of FSI not deployed in construction.

Issue (i): Whether deduction under section 80-IB(10) of the Income-tax Act, 1961 could be denied on the ground that the assessee was not the legal owner of the land and the approval of the housing project stood in the landowners' names.

Analysis: The provision, as applicable, required an undertaking developing and building an approved housing project, minimum plot area, prescribed built-up area limits, and commencement within the statutory time-frame. It did not expressly make ownership of the land a condition precedent. The development and sale agreements showed that the assessee had possession, control, development rights, responsibility for permissions, construction, marketing, and completion of the project, while the landowners were to receive only the land price. The Court treated the assessee as the real developer, not a mere contractor, and applied a liberal and purposive construction to a beneficial provision. It also relied on the wider concept of ownership and dominion recognized in income-tax jurisprudence and the effect of part performance.

Conclusion: The absence of legal title and the fact that the municipal approval was in the landowners' names did not disentitle the assessee. The assessee was entitled to deduction under section 80-IB(10).

Issue (ii): Whether the deduction could be curtailed or denied on the footing that there was alleged unutilized FSI or profit from sale of FSI not deployed in construction.

Analysis: The Court held that section 80-IB(10) contains no requirement that the entire permissible FSI must be fully utilized. The deduction turns on profits derived from the eligible housing project, not on a notional requirement to exhaust the available FSI. The record did not show that the assessee had sold FSI as an independent commercial item divorced from the housing project; rather, the construction was carried out in accordance with the approved scheme and the permissible built-up area limits.

Conclusion: The claim could not be denied on the ground of alleged unutilized FSI.

Final Conclusion: The assessees succeeded on the substantive controversy relating to eligibility under section 80-IB(10), while the revenue's objections were rejected, and the connected appeals were disposed of accordingly.

Ratio Decidendi: For section 80-IB(10), the decisive test is whether the assessee undertook and executed the development and building of an approved housing project within the statutory conditions; legal ownership of the land is not an implied prerequisite, and the provision does not require full utilization of FSI.

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