SUPREME COURT OF INDIA M/S VEENA C.I.T CENTRAL PUNE v. DEVELOPERS April 28, 2015 ORDER Delay condoned. SLP (C)No. 22450/2011 etc. All these special leave petitions are filed by Revenue/ Department of Income tax against judgments rendered by various High Courts deciding identical issue which pertains to deduction under Section 80IB(10) of Income Tax Act, as applicable prior to 01.04.2005. We may mention at outset that all High Courts have taken identical view in all these cases holding that deduction under aforesaid provision would be admissible to "housing project". All assessees had undertaken construction projects which were approved by municipal authorities/ local authorities as housing projects. On that basis, they claimed deduction under Section 80IB(10) of Act. This provision as it stood at that time, i.e., prior to 01.04.2005 reads as under:- Section 80IB(10) [as it stood prior to 01.04.2005] "(10) amount of profits in case of undertaking developing and building housing projects approved before 31st day of March, 2005 by local authority, shall be hundred per cent of profits derived in any previous year relevant to any assessment year from such housing project if, - (a) such undertaking has commenced or commences development and construction of housing project on or after 1st day of October, 1998; (b) project is on size of plot of land which has minimum area of one acre; and (c) residential unit has maximum built-up area of one thousand square feet where such residential unit is situated within cities of Delhi or Mumbai or within twenty-five kilometres from municipal limits of these cities and one thousand and five hundred square feet at any other place." However, income tax authorities rejected claim of deduction on ground that projects were not "housing project" inasmuch as some commercial activity was also undertaken in those projects. This contention of Revenue is not accepted by income tax Appellate Tribunal as well as High Court in impugned judgment. High Court interpreted expression "housing project" by giving grammatical meaning thereto as housing project is not defined under Income Tax Act insofar as aforesaid provision is concerned. Since sub-section (10) of Section 80IB very categorically mentioned that such project which is undertaken as housing project is approved by local authority, once project is approved by local authority it is to be treated as housing project. We may also point out that High Court had made observations in context of Development Control Regulations (hereinafter referred to as 'DCRs' in short) under which local authority sanctions housing projects and noted that in these DCRs itself, element of commercial activity is provided but total project is still treated as housing project. On basis of this discussion, after modifying some of directions given by ITAT, conclusions which are arrived at by High Court are as follows:- "30. In result, questions raised in appeal are answered thus:- a) Upto 31/3/2005 (subject to fulfilling other conditions), deduction under Section 80IB(10) is allowable to housing projects approved by local authority having residential units with commercial user to extent permitted under DC Rules/ Regulations framed by respective local authority. b) In such case, where commercial user permitted by local authority is within limits prescribed under DC Rules/ Regulation, deduction under Section 80IB(10) upto 31/3/2005 would be allowable irrespective of fact that project is approved as 'housing project' or 'residential plus commercial'. c) In absence of any provisions under Income Tax Act, Tribunal was not justified in holding that upto 31/3/2005 deduction under Section 80IB(10) would be allowable to projects approved by local authority having residential building with commercial user upto 10% of total built-up area of plot. d) Since deductions under Section 80IB(10) is on profits derived from housing projects approved by local authority as whole, Tribunal was not justified in restricting Section 80IB(10) deduction only to part of project. However, in present case, since assessee has accepted decision of Tribunal in allowing Section 80IB(10) deduction to part of project, we do not disturb findings of Tribunal in that behalf. e) Clause (d) inserted to Section 80IB(10) with effect from 1/4/2005 is prospective and not retrospective and hence cannot be applied for period prior to 1/4/2005." We are in agreement with aforesaid answers given by High Court to various issues. We may only clarify that insofar as answer at para (a) is concerned, it would mean those projects which are approved by local authorities as housing projects with commercial element therein. There was much debate on answer given in para (b) above. It was argued by Mr. Gurukrishna Kumar, learned senior counsel, that project which is cleared as "residential plus commercial" project cannot be treated as housing project and therefore, this direction is contrary to provisions of Section 80(I)(B)(10) of Act. However, reading direction in its entirety and particularly first sentence thereof, we find that commercial user which is permitted is in residential units and that too, as per DCR. Examples given before us by learned counsel for assessee was that such commercial user to some extent is permitted to professionals like Doctors, Chartered Accountants, Advocates, etc., in DCRs itself. Therefore, we clarify that direction (b) is to be read in that context where project is predominantly housing/ residential project but commercial activity in residential units is permitted. With aforesaid clarification, we dispose of all these special leave petitions. SLP (C) No.8827/2015, SLP (C) No.9132/2014, SLP (C)No.9871/2014, SLP (C) No.8823/2015, SLP (C) No.7570/2015, SLP (C) No. 8829/2015, SLP (C) No.10290/2014, SLP (C) No.24330/2011, SLP (C) No.8390/2015, SLP (C) No.4651/2015, SLP (C) No.4652/2015, SLP (C) No.7579/2015, SLP(C) No.12063/2015, SLP(C) No. 7578/2015, SLP(C) No. 8828/2015, SLP(C) No. 7575/2015, SLP(C) No. 8825/2015, SLP(C) No.5769/2015 List on Thursday 30th April, 2015. (Nidhi Ahuja) (Suman Jain) COURT MASTER COURT MASTER C.I.T CENTRAL PUNE v. M/S VEENA DEVELOPERS