Built-up area under section 80IB(10): open terrace excluded, search-sourced flat sale receipts remain deductible, overlapping cash addition deleted.

An open projected terrace attached to residential units was treated as outside the statutory definition of "built-up area" under section 80IB(10)(c) because it is neither a balcony nor an enclosed projection, so the project continued to satisfy the area condition. Undisclosed receipts from flat sales in the same eligible housing project, though discovered during search and assessed as additional income, were regarded as project-derived business income and remained eligible for deduction under section 80IB(10). The peak negative cash balance addition was deleted because it was based on the same surrendered receipts, and sustaining both would amount to double taxation.

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Issues: (i) Whether the area of an open projected terrace attached to residential units is includible in the expression "built-up area" for the purpose of section 80IB(10)(c); (ii) Whether undisclosed receipts from sale of flats in an eligible housing project, declared during search and assessed as additional income, qualify for deduction under section 80IB(10); (iii) Whether addition made on account of peak negative cash balance in the cash book could be sustained when the same amount was already covered by the surrendered undisclosed receipts.

Issue (i): Whether the area of an open projected terrace attached to residential units is includible in the expression "built-up area" for the purpose of section 80IB(10)(c)

Analysis: The definition of "built-up area" in section 80IB(14)(a) includes inner measurements at floor level, projections and balconies, but not common areas. The disputed area was an open terrace, available to the unit holder, and not a balcony or enclosed projection. The controlling reasoning was taken from the judicial view that an open terrace cannot be equated with a projection or balcony and that the local authority's approved plan and measurement principles do not justify its inclusion merely because it is exclusively usable by the purchaser.

Conclusion: The open projected terrace is not part of the built-up area; the assessee succeeds on this issue and the six units satisfy section 80IB(10)(c).

Issue (ii): Whether undisclosed receipts from sale of flats in an eligible housing project, declared during search and assessed as additional income, qualify for deduction under section 80IB(10)

Analysis: The additional amount was traced to cash received from customers against sale of flats in the very same housing project. Once the source of the receipts was linked to the eligible project, the income retained its character as project-derived business income. Since the housing project itself qualified for section 80IB(10) relief, the enhanced receipts arising from the project could not be denied the deduction merely because they were discovered during search and were earlier unrecorded in the books.

Conclusion: The surrendered receipts are eligible for deduction under section 80IB(10); the assessee succeeds on this issue.

Issue (iii): Whether addition made on account of peak negative cash balance in the cash book could be sustained when the same amount was already covered by the surrendered undisclosed receipts

Analysis: The cash-book deficit was founded on the same seized material and the same set of undisclosed receipts already offered to tax. Sustaining both additions would amount to taxing the same income twice.

Conclusion: The peak negative balance addition was rightly deleted; the issue is decided in favour of the assessee.

Final Conclusion: The assessee was entitled to deduction under section 80IB(10) for the project and for the related undisclosed receipts, and the Revenue's challenge to the deletion of the overlapping cash-book addition also failed, resulting in complete relief to the assessee.

Ratio Decidendi: For an approved housing project, an open terrace is not includible in "built-up area" merely because it is exclusively attached to a unit, and income found to have arisen from the eligible project retains the character of project-derived business income eligible for section 80IB(10) relief.

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