Prospective built-up area definition and actual completion date govern housing project deduction under section 80IB(10)

A prospective definition of built-up area inserted into section 80IB(14)(a) could not be applied to a housing project approved earlier; the project was to be tested against the sanctioned plan and building rules in force at approval, and balcony, porch and similar projections were excluded from computation, so the section 80IB(10) limit remained satisfied. Completion for deduction purposes depended on the actual date of completion, not the later issue of the municipal completion certificate; where the assessee had applied on time and completion was otherwise shown within the prescribed period, administrative delay in issuing the certificate could not defeat the claim. The deduction was therefore allowable on both grounds.

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Issues: (i) Whether deduction under section 80IB(10) could be denied on the ground that the housing project did not satisfy the built-up area limit after insertion of the definition in section 80IB(14)(a); (ii) Whether the project was to be treated as not completed in time merely because the completion certificate was issued later by the municipal authority.

Issue (i): Whether deduction under section 80IB(10) could be denied on the ground that the housing project did not satisfy the built-up area limit after insertion of the definition in section 80IB(14)(a).

Analysis: The project had been approved before the statutory definition of built-up area was inserted with effect from 1 April 2005. The enlarged meaning of built-up area introduced by section 80IB(14)(a) was held to be prospective and not applicable to projects already approved earlier. The relevant construction was to be judged on the basis of the law and sanctioned plan prevailing at the time of approval, and the State building rules excluded items such as porch, staircase, balcony and similar projections from built-up area computation. On that basis, the residential units remained within the prescribed limit.

Conclusion: The objection based on built-up area failed and deduction under section 80IB(10) was allowable.

Issue (ii): Whether the project was to be treated as not completed in time merely because the completion certificate was issued later by the municipal authority.

Analysis: The material on record showed that the assessee had applied for completion certificate within time and the municipal authority later clarified the actual date of completion to be within the prescribed period. The date of completion, not the date on which the authority eventually issued the certificate, was treated as material. Any delay on the part of the municipal authority in issuing the formal certificate could not be put against the assessee where completion within time was otherwise established.

Conclusion: The project was treated as completed within time and the assessee's claim could not be rejected on that ground.

Final Conclusion: The statutory conditions for deduction were held to be satisfied on the facts found, and the disallowance was set aside in full.

Ratio Decidendi: A definition inserted into a tax incentive provision with prospective effect cannot be applied to housing projects approved earlier, and completion for deduction purposes turns on the actual date of completion rather than delayed issuance of the completion certificate by the local authority.

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