Housing project deduction under section 80IB(10) available to a developer without land ownership, including unutilized FSI profit

An assessee that developed and constructed a housing project on land not owned by it was treated as eligible for deduction under section 80IB(10) because it had possession, dominant control, bore the project risk and expense, obtained permissions, and functioned as a developer rather than a fixed-remuneration contractor. The governing approach in the cited tribunal precedents was that legal ownership of the land was not an express statutory requirement where the assessee otherwise developed an approved housing project. On those facts, the deduction was also extended to profits attributable to unutilized FSI, as they formed part of the same development activity.

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Issues: Whether the assessee, who developed a housing project on land not owned by it and where approval stood in the landowners' names, was entitled to deduction under section 80IB(10) of the Income-tax Act, 1961, and whether profits attributable to unutilized FSI also qualified for the deduction.

Analysis: The assessee had entered into a development agreement under which it obtained possession and dominant control over the land, undertook the entire development and construction at its own cost and risk, obtained necessary permissions and bore the project expenses. The statutory provision, as applied in the earlier tribunal decisions relied upon, required an undertaking developing and building an approved housing project and did not expressly mandate legal ownership of the land. The Tribunal examined the terms of the agreement in the light of the governing precedents and held that the decisive factor was whether the assessee acted as a developer with control and risk in the project or merely as a contractor for fixed remuneration. On the facts found, the assessee's arrangement was treated as a development arrangement, and the claim relating to unutilized FSI was also covered by the same line of reasoning.

Conclusion: The assessee was held entitled to deduction under section 80IB(10), including the component relatable to unutilized FSI.

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