Flower bed area not included in “built up area” to calculate eligible limit u/s 80IB(10)

Flower bed area could not be included in the definition of “built up area” to calculate eligible limit of 1000 sq.ft. u/s 80IB(10). 

In a recent judgment Hon’ble Supreme Court has dismissed the SLP of the Revenue against the judgment of the Hon’ble High Court that flower bed area could not be included in the definition of “built up area” while calculating the eligible limit of 1000 sq.ft. for the purposes of allowing the deduction under Section 80IB(10) of the IT Act. 

ABCAUS Case Law Citation:
5228 (2026) (09) abacus.in SC

A flower bed area in an apartment is a small, designated concrete recess or ledge attached to an exterior window, living space, or balcony that is originally intended for growing plants and flowers. Builders in some urban areas include flower bed spaces in the built-up area calculation and charge buyers for them.

In the instant case, the respondent assessee was engaged in the business of construction of buildings and development of properties. The Assessing Officer (AO) was of the view that flower bed area would have to be included for calculating the eligible limit of 1000 sq. ft for the purpose of allowing the deduction under Section 80IB(10) of the Income Tax Act, 1961 (the Act). The CIT(A) concurred with the AO.

Before the Tribunal, the assessee placed reliance on the words “built up area” as defined in Section 80IB(14)(a) of the Act and submitted that the crux of the definition and intention behind definition of the words “built up area” was to include only the habitable area which is exclusively built for a particular residential unit at the floor level.  Since the flower bed area is not a habitable area at all and further, not on the floor level, the flower bed area could never be included in the “built up area” for determining the eligible 1000 sq.ft. to claim a deduction under Section 80IB(10).  

The Tribunal came to a factual finding that the flower bed area was open to the sky and not covered on any sides whereas the balcony was covered by three sides.  Further the flower bed area was a few inches below the floor level and it is outside the balcony area.

The ITAT also took note of the argument of the assessee that the flower bed area is ornamental and an elevative feature provided on the outer side of the residential unit, which was not a habitable area and was provided only for elevation and design of the building.

The Tribunal held that the flower bed area could not be included in the definition of the words “built up area” while calculating the eligible limit of 1000 sq. ft. for the purpose of allowing the deduction under Section 80IB(10) of the Act.

The Hon’ble High Court observed that it was not in dispute that the flower bed area was not covered, it was below the floor level of the residential unit, for FSI calculations as per the Development Control Regulations it is excluded, and most importantly it is outside the residential unit. In other words, it starts where the balcony ends.

The Hon’ble High Court observed that the definition of the words “built up area” found in Section 80IB(14)(a) of the Act means the inner measurements of the residential unit at the floor level including projections and balconies, as increased by the thickness of the walls, but does not include the common areas shared with other residential units.

The Hon’ble High Court found favour with the ITAT, is that the words “the inner measurements of the residential units at the floor level” cover the carpet area which is the actual habitable area used by the resident of the flat.  Such areas are enclosed and surrounded by four walls and are at floor level.  The words following these words namely “including the projections and balconies” are in continuity.   In other words, if there are any projections or balconies that are habitable/are capable of being effectively used by the flat purchaser, the same would be includable in the definition of the words “built up area”.

Accordingly, the Hon’ble High Court held that ITAT had correctly decided this issue in favour of the Assessee.

Not satisfied with the judgment of the High Court, the Department challenged it before the Hon’ble Supreme Court by way of filing a Special Leave Petition. However, the Apex Court dismissed the SLP with the following observations,

“we find no good ground and reason to interfere with the impugned judgment/order passed by the High Court.  The special leave petition is, accordingly, dismissed.”

Download Full Judgment Click Here >>

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