Prospective application of housing-project deduction rules barred denial based on later built-up area and completion certificate requirements.

Amendments enlarging the disqualifying conditions for housing-project deduction under section 80IB(10) operate prospectively. The amended definition of built-up area in section 80IB(14)(a), inserted from 1 April 2005, was treated as a substantive change and could not be applied to projects approved before that date; eligibility had to be tested under the regime in force when approval was granted. Non-issuance of a completion certificate by the local authority within time did not by itself defeat the claim where the assessee had applied in time, shown physical completion and possession, and the governing local law contemplated deemed permission. Deduction under section 80IB(10) was therefore available.

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Issues: (i) Whether the amended definition of built-up area under section 80IB(14)(a) of the Income-tax Act, 1961 could be applied retrospectively to housing projects approved before 1 April 2005 for determining eligibility under section 80IB(10). (ii) Whether non-issuance of a completion certificate by the local authority within the stipulated time could deny deduction under section 80IB(10) where the projects were otherwise completed and application for completion certificate had been made in time.

Issue (i): Whether the amended definition of built-up area under section 80IB(14)(a) of the Income-tax Act, 1961 could be applied retrospectively to housing projects approved before 1 April 2005 for determining eligibility under section 80IB(10).

Analysis: The projects were approved prior to 1 April 2005. The inserted definition of built-up area came into force from 1 April 2005 and was held to be a substantive amendment. The provision could not be fastened on projects already sanctioned under the earlier regime. For such projects, built-up area had to be tested on the basis applicable when approval was granted, and the later enlargement of the definition could not be used to disqualify the assessee.

Conclusion: The amendment was prospective only and could not be applied to deny deduction for the projects in question.

Issue (ii): Whether non-issuance of a completion certificate by the local authority within the stipulated time could deny deduction under section 80IB(10) where the projects were otherwise completed and application for completion certificate had been made in time.

Analysis: The assessee had applied for completion certificate within time and produced material showing physical completion and delivery of possession. The local authority's failure to issue the certificate within the statutory period could not by itself defeat the claim, particularly where the governing local law provided for deemed permission if the authority did not act within the prescribed period. The completion requirement inserted by amendment was treated as applicable prospectively, not to pre-amendment approvals.

Conclusion: Deduction could not be denied merely for want of a timely issued completion certificate in these facts.

Final Conclusion: The assessee was held entitled to deduction under section 80IB(10), and the revenue's objections on built-up area and completion certificate failed.

Ratio Decidendi: Amendments enlarging disqualifying conditions for housing-project deduction under section 80IB(10) operate prospectively, and where the assessee has completed the project in substance and complied with the pre-amendment conditions, deduction cannot be denied solely because a later amendment or an authority's delay in issuing completion certificate is invoked.

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