Housing project deduction depends on developer control, and an open penthouse terrace is not built-up area.

Deduction under section 80-IB(10) was upheld where the developer had dominant control over the housing project, undertook planning, construction, marketing, and sale collection, and bore the project risk. Formal land ownership in the society's name did not by itself make the assessee a mere works contractor or agent. The open terrace in front of a penthouse was also excluded from built-up area because it was not a covered internal space and could not be treated as a balcony or verandah. On these facts, the project met the statutory conditions for deduction and the disallowance was set aside.

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Issues: (i) Whether the assessee was entitled to deduction under section 80-IB(10) despite the land being in the name of the society and the Department's case that the assessee acted only as a contractor or agent. (ii) Whether the residential units breached the built-up area limit under section 80-IB(10) by including the open terrace in front of the penthouse as part of the built-up area.

Issue (i): Whether the assessee was entitled to deduction under section 80-IB(10) despite the land being in the name of the society and the Department's case that the assessee acted only as a contractor or agent.

Analysis: The agreement for development and the agreement to sell showed that the assessee had undertaken the planning, construction, marketing, receipt of sale consideration, and bearing of profits and losses of the project. The assessee had dominant control over the project and had developed the housing project at its own cost and risk. On those facts, the absence of formal land ownership did not by itself disqualify the claim, and the assessee was not to be treated merely as a works contractor for the landowner.

Conclusion: The issue was decided in favour of the assessee. Deduction under section 80-IB(10) could not be denied merely because the land stood in the society's name.

Issue (ii): Whether the residential units breached the built-up area limit under section 80-IB(10) by including the open terrace in front of the penthouse as part of the built-up area.

Analysis: The definition of built-up area under section 80-IB(14)(a) includes projections and balconies but not common areas. The open terrace in front of the penthouse was not a covered internal area and could not be equated with a balcony or verandah for the purpose of enlarging the built-up area. On the assessee's working, the units therefore remained within the statutory ceiling.

Conclusion: The issue was decided in favour of the assessee. The open terrace could not be added to the built-up area so as to deny the deduction.

Final Conclusion: The assessee satisfied the statutory conditions for deduction under section 80-IB(10), and the disallowance was set aside.

Ratio Decidendi: For deduction under section 80-IB(10), what matters is whether the assessee developed and built the housing project with dominant control and business risk, and a non-covered open terrace cannot be treated as built-up area merely because it is used exclusively with a penthouse.

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