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Issues: (i) Whether a developer or builder, though not the owner of the land, is entitled to deduction under Section 80IB(10) of the Income-tax Act. (ii) Whether the housing project satisfied the completion requirement under Section 80IB(10)(a) and whether the belated completion certificate issued by one authority defeated the claim. (iii) Whether deduction under Section 80IB(10) could be denied in toto because some residential units exceeded the prescribed built-up area, and whether the terrace area formed part of the built-up area for that purpose.
Issue (i): Whether a developer or builder, though not the owner of the land, is entitled to deduction under Section 80IB(10) of the Income-tax Act.
Analysis: The deduction is linked to the business activity of developing and building a housing project and not to ownership of the land. The agreement showed that the assessee undertook the development risk, entered into builder agreements with purchasers, bore the construction burden, and was exposed to commercial risk distinct from the landowner. The statutory text did not make ownership a precondition for the benefit. The later Explanation also supported the distinction between a developer and a mere works contractor.
Conclusion: The assessee was entitled to claim deduction as a developer or builder notwithstanding absence of land ownership.
Issue (ii): Whether the housing project satisfied the completion requirement under Section 80IB(10)(a) and whether the belated completion certificate issued by one authority defeated the claim.
Analysis: The project was factually completed within the statutory time, and the local authority had issued completion certificate before the relevant cut-off. The later certificate issued by another authority could not override the factual completion already certified by the competent local authority. Explanation (2) to Section 80IB(10) could not be read so as to control or nullify the substantive benefit where completion had in fact occurred in time.
Conclusion: The completion condition was satisfied, and the assessee's claim could not be denied on the ground of the later certificate.
Issue (iii): Whether deduction under Section 80IB(10) could be denied in toto because some residential units exceeded the prescribed built-up area, and whether the terrace area formed part of the built-up area for that purpose.
Analysis: The Court accepted that deduction could not be denied for the entire project merely because some units did not satisfy the size condition, and the assessee was entitled at least to relief in respect of compliant units. The open or private terrace attached to the flat was not to be included in the built-up area for denying the benefit. The remand for factual verification of the unit measurements was sustained, but the principle of proportionate relief was approved.
Conclusion: Deduction was available to compliant units, the terrace area was not includible as built-up area, and the assessee could not be denied the entire benefit on that ground.
Final Conclusion: The Revenue's appeals failed, the assessee's appeals succeeded, and the Tribunal's approach to granting relief under Section 80IB(10) was substantially upheld.
Ratio Decidendi: For deduction under Section 80IB(10), ownership of the land is not a necessary condition where the assessee is the real developer undertaking the project risk, and completion must be tested by factual completion certified by the competent local authority rather than defeated by a later administrative certificate.
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