Assessee wins deductions for small housing units under section 80-IB(10) despite larger units.

The Tribunal ruled in favor of the assessee, allowing deductions under section 80-IB(10) proportionately for housing units with built-up areas less than 1500 sq. ft. The denial of these claims for the assessment years was overturned, as the project had received necessary approvals from local authorities and met the requirements of the Income-tax Act. The presence of some units exceeding 1500 sq. ft. did not disqualify the entire project, and proportional deductions were deemed permissible based on previous decisions.

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Issues Involved:
1. Denial of deduction under section 80-IB(10) of the Income-tax Act, 1961.
2. Approval of the housing project by local authorities.
3. Built-up area exceeding 1500 sq. ft. for some housing units.

Issue-Wise Detailed Analysis:

1. Denial of Deduction under Section 80-IB(10):
The primary grievance of the assessee was the denial of deduction under section 80-IB(10) of the Income-tax Act for the assessment years 2003-04 and 2004-05. The assessee, engaged in property development, claimed deductions for specific housing units that met the criteria of being less than 1500 sq. ft. The Assessing Officer denied the deduction on the grounds that the project was not exclusively for units under 1500 sq. ft., approvals were unit-wise rather than project-wise, and the certificate from the Village Administrative Officer (VAO) was not acceptable.

2. Approval of the Housing Project by Local Authorities:
The Commissioner of Income-tax (Appeals) upheld the denial, emphasizing that the entire project must be considered as a whole for approval, and individual house approvals could not substitute for project approval. The assessee argued that the project had approval from the Deputy Collector Town Planning and that the total housing units included a substantial number of units under 1500 sq. ft. The Tribunal reviewed the approval documents, including a letter from the Deputy Director Town Planning dated February 16, 1987, and concluded that the project had indeed received necessary approvals from local authorities, thus meeting the requirements of section 80-IB(10).

3. Built-up Area Exceeding 1500 sq. ft. for Some Housing Units:
The Tribunal considered whether the presence of some units exceeding 1500 sq. ft. invalidated the entire project's eligibility for deduction. The Tribunal referenced several decisions, including those from co-ordinate Benches, which supported the view that deductions could be claimed proportionately for units that met the criteria. The Tribunal noted that the project as a whole exceeded one acre and that the area for units under 1500 sq. ft. was substantial. The Tribunal rejected the Departmental representative's contention that the presence of larger units disqualified the project, citing decisions that allowed for proportional deductions.

Conclusion:
The Tribunal concluded that the assessee was eligible for claiming deductions under section 80-IB(10) proportionately for the housing units with built-up areas less than 1500 sq. ft. for both assessment years. The disallowance of such claims was deleted, and the appeals of the assessee were allowed.

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