Section 80-IB(10) — There is no precondition that the assessee should be the owner of the land for claiming deduction — Terrace in front of penthouse should not be considered while measuring built-up area.

Section 80-IB(10) — There is no precondition that the assessee should be the owner of the land for claiming deduction — Terrace in front of pent-house should not be considered while measuring built-up area.

The assessee was a builder and developer of housing projects and claimed deduction u/s.80-IB. During the relevant year under consideration, it constructed a housing project and claimed deduction u/s.80-IB. The AO disallowed the deduction u/s.80-IB on the ground that the builder was not the owner of the land and various permissions and approvals were granted in the name of the co-operative society. Further, based on the DVO report, the AO observed that, out of 110 flats, the penthouses on the top floor of each building had a built-up area of more than 1500 sq.ft.

The contention of the Revenue authorities that the assessee must be the owner of the land to claim deduction u/s.80-IB has no force. There is no such condition for claiming deduction u/s.80- IB. Further, the agreement to sell showed that assessee purchased the property in question for a consideration of Rs.3 lakh. All the responsibilities for carrying out the construction, permission and development of the project lie with the assessee. The dominant control over the land was with assessee. The real owner was only to co-operate with the assessee. Also the assessee was only entitled to enrol members for selling the units within its own rights. Further, the deduction u/s.80-IB is not exclusively to an assessee but to an undertaking developing and building housing project, be it by a contractor or by an owner. Hence, the assessee cannot be denied deduction u/s.80-IB on this ground.

The next issue was of ‘built-up area’ exceeding the prescribed limits of 1500 sq.ft. in case of some of the flats. The AO, based on DVO’s report, had included the area of open terrace in front of the penthouses on the top floor of each building in the total builtup area, thereby increasing the maximum limits. The contention of assessee was that the definition of built-up area means inner measurement of residential unit at floor level including projections and balconies. But open terrace in front of penthouse, not being a covered area and open to sky, should not be considered as a part of built-up area. This contention was accepted by the Tribunal and hence the assessee’s appeal was allowed.