Liberal construction of slum redevelopment deduction under section 80IB(10) protects eligible projects from restrictive notification conditions.

A beneficial proviso to section 80IB(10) was applied liberally to slum rehabilitation housing projects, so the minimum plot-size condition could not be used to deny deduction where the project was undertaken under a notified Government slum-redevelopment scheme. The clarificatory CBDT notification could not override or narrow the statutory proviso by adding a restrictive approval-date condition inconsistent with the legislative object, and eligibility for deduction was upheld. On rent paid to relatives, the expenditure was accepted as genuine because supporting records were produced and no contrary material was brought to dislodge the factual finding; the disallowance was therefore deleted.

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Issues: (i) Whether the assessee was entitled to deduction under section 80IB(10) of the Income-tax Act, 1961 in respect of a slum rehabilitation housing project though the plot area was less than one acre, and whether the CBDT notification and clarificatory notification controlled the statutory proviso; (ii) Whether the disallowance of rent expenses paid to relatives was justified.

Issue (i): Whether the assessee was entitled to deduction under section 80IB(10) of the Income-tax Act, 1961 in respect of a slum rehabilitation housing project though the plot area was less than one acre, and whether the CBDT notification and clarificatory notification controlled the statutory proviso.

Analysis: The proviso to section 80IB(10) carved out an exception for housing projects carried out in accordance with a Central or State Government scheme for reconstruction or redevelopment in slum areas, where the scheme is notified by the Board. The project was undertaken under the Slum Rehabilitation Authority scheme and the Board had notified the relevant scheme. The clarificatory notification of 2011 was treated as applying to eligible projects and could not be read so as to defeat the legislative object by imposing a restrictive approval-date condition inconsistent with the proviso. The provision was held to be a beneficial and curative amendment meant to relax the minimum plot-size requirement for genuine slum redevelopment projects.

Conclusion: The assessee was held eligible for deduction under section 80IB(10), and the Revenue's challenge failed on this issue.

Issue (ii): Whether the disallowance of rent expenses paid to relatives was justified.

Analysis: The rent payments were supported by documents and details placed on record, and no contrary material was shown to dislodge their genuineness or business character. On the material before the Tribunal, the factual finding of the first appellate authority was not shown to suffer from infirmity.

Conclusion: The disallowance of rent expenses was deleted and the Revenue's challenge failed on this issue.

Final Conclusion: The Revenue's appeal was rejected in entirety, and the relief granted to the assessee by the first appellate authority was sustained.

Ratio Decidendi: A beneficial proviso for slum-redevelopment housing projects under section 80IB(10) must be construed liberally, and a clarificatory notification or subordinate condition cannot narrow the statutory exemption where the project otherwise satisfies the notified government scheme.

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