Assessee entitled to deduction under section 80-IB(10) for developer-builder projects

The Tribunal determined that the assessee is a developer-builder entitled to deduction under section 80-IB(10). The completion certificate, even if obtained after the due date but applied for before, is valid. The ownership of the land is not crucial for claiming the deduction. The private terrace is considered part of the built-up area. The Tribunal allowed deduction for flats not exceeding 1500 sq.ft., without imposing a 10% cap on flats exceeding this limit.

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Issues Involved:
1. Whether the assessee is a contractor or a builder or a developer.
2. Whether the completion certificate obtained after the due date but for which the application was given before the due date should be considered as due compliance.
3. Whether the undertaking developing and building the housing project should be the owner of the plot of land having an area of one acre.
4. Whether the private terrace is to be considered as part of the built-up area of the flat for computing the built-up area of 1500 sq.ft. as per section 80-IB(14) of the Income-tax Act, 1961.
5. Whether the built-up area exceeding 1500 sq.ft. entitles the assessee to deduction under section 80-IB(10) of the Income-tax Act, 1961 on a pro rata basis.

Detailed Analysis:

Issue 1: Whether the assessee is a contractor or a builder or a developer.
The Tribunal held that the assessee is a builder and developer and not merely a building contractor. The assessee was engaged in the business of construction, had exclusive rights to sell the flats, determine the sale price, and collect the entire sales consideration. The assessee undertook all investment risks, including the risk of unsold flats and the fluctuation in building material prices. The Tribunal concluded that the assessee is a builder, developer, and contractor, all rolled into one, and thus entitled to deduction under section 80-IB(10).

Issue 2: Whether the completion certificate obtained after the due date but for which the application was given before the due date should be considered as due compliance.
The Tribunal held that the completion certificate, even if issued after the due date, should be considered valid if the application was made before the due date. The certificate relates back to the date of application. The Tribunal accepted the completion certificate issued by the Corporation of Chennai, which stated that the building was inspected and found to satisfy the approved building permit conditions before the due date.

Issue 3: Whether the undertaking developing and building the housing project should be the owner of the plot of land having an area of one acre.
The Tribunal held that the ownership of the land is not a criterion for claiming deduction under section 80-IB(10). The project must be on a plot of land with a minimum area of one acre, irrespective of whether the land is owned by the developer or another party. The assessee, having developed the project on such land, fulfilled this condition.

Issue 4: Whether the private terrace is to be considered as part of the built-up area of the flat for computing the built-up area of 1500 sq.ft. as per section 80-IB(14) of the Income-tax Act, 1961.
The Tribunal held that the private terrace should be included in the built-up area of the flat. The term "built-up area" includes the inner measurements of the residential unit at the floor level, including projections and balconies. Since the private terrace was for the exclusive use of the flat owner and not a common area, it had to be included in the built-up area computation.

Issue 5: Whether the built-up area exceeding 1500 sq.ft. entitles the assessee to deduction under section 80-IB(10) of the Income-tax Act, 1961 on a pro rata basis.
The Tribunal was divided on this issue. The Vice-President held that the deduction should be allowed for flats with a built-up area not exceeding 1500 sq.ft., even if some flats exceed this limit. However, the deduction should be denied for flats exceeding 1500 sq.ft. The Judicial Member disagreed, stating that any violation of the built-up area limit disqualifies the entire project from claiming the deduction. The Third Member, agreeing with the Vice-President, held that the assessee is entitled to deduction for flats not exceeding 1500 sq.ft., and the decision of the Hon'ble Calcutta High Court in the case of Bengal Ambuja Housing Development Ltd. (supra) supports this view. The Tribunal ultimately decided not to impose a 10% cap on flats exceeding 1500 sq.ft.

Conclusion:
The Tribunal concluded that the assessee is a developer-builder entitled to deduction under section 80-IB(10), subject to verification of the built-up area of flats. The completion certificate obtained after the due date but applied for before the due date is valid. The private terrace is included in the built-up area. The assessee is entitled to deduction for flats not exceeding 1500 sq.ft., and no 10% cap is required for flats exceeding this limit.

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