Section 80-IB(10) housing project relief upheld where developer status, approvals, completion and built-up area conditions were satisfied.

For deduction under section 80-IB(10), a housing project was interpreted in its ordinary commercial sense as a residential development comprising one building or a group of buildings, and the assessee's project qualified on that basis. The assessee was treated as a developer, not a works contractor, because it controlled development, took possession, arranged infrastructure, negotiated with buyers and bore commercial risk. The statutory conditions on approval, completion and minimum plot area were also found satisfied on the facts. An open terrace was not included in built-up area because it was not a balcony or projection under the statutory definition, so the area limit was not breached. The deduction was therefore upheld.

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Issues: (i) whether the project was a housing project eligible for deduction under section 80-IB(10); (ii) whether the assessee executed the project as a works contractor or as a developer taking investment risk; (iii) whether the project satisfied the conditions relating to approval, completion and minimum area of the plot; and (iv) whether the open terrace area could be included in the built up area so as to breach the prescribed limit.

Issue (i): whether the project was a housing project eligible for deduction under section 80-IB(10)

Analysis: The expression 'housing project' was treated in its ordinary commercial sense as a project for constructing one building or a group of buildings consisting of residential units. The project consisted of multiple independent residential units developed with basic infrastructure and approved by the local authority for construction of dwelling units. The revenue's attempt to distinguish between a 'scheme' and a 'project' was rejected as an unwarranted reading of additional conditions into the provision.

Conclusion: The project was held to be a housing project and, on that issue, the assessee was held entitled to deduction.

Issue (ii): whether the assessee executed the project as a works contractor or as a developer taking investment risk

Analysis: The assessee had entered into development arrangements with landowners, paid advances, taken possession, developed infrastructure, negotiated with buyers and carried out construction of the residential units. The project was not shown to have been awarded as a works contract by any person. The substance of the transactions showed that the assessee had full control over development and sale of the units and bore the commercial risk of the project.

Conclusion: The assessee was held to be a developer and builder, not a works contractor, and the deduction could not be denied on that ground.

Issue (iii): whether the project satisfied the conditions relating to approval, completion and minimum area of the plot

Analysis: The project was carried out over a consolidated extent exceeding one acre, with phased approvals for the dwelling units obtained from the local authority. The first approval for prototype units did not govern the whole project so as to defeat the benefit of the provision. The last approval was obtained within the statutory cut-off and the project was completed within the permissible time. The layout approval date was held not to be the relevant date for determining project approval under section 80-IB(10).

Conclusion: The conditions relating to approval, completion and minimum plot area were held to have been satisfied.

Issue (iv): whether the open terrace area could be included in the built up area so as to breach the prescribed limit

Analysis: The built up area was to be computed in accordance with the statutory definition, which covers the inner measurements, wall thickness, projections and balconies. An open terrace or open-to-sky space not constituting a balcony or projection was not treated as part of the built up area. On the facts, the unit-wise built up area remained within the prescribed limit after excluding the open terrace.

Conclusion: The open terrace area was held not includible in the built up area, and the assessee was held to have complied with the area restriction.

Final Conclusion: The assessee satisfied the statutory conditions for deduction under section 80-IB(10), so the Revenue's challenge failed and the deduction was upheld.

Ratio Decidendi: For deduction under section 80-IB(10), a housing project developed and constructed by the assessee need not be owned by the assessee, and open terrace or similar open space cannot be included in built up area unless the statute expressly so provides.

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