Local authority approval for housing project deduction cannot be narrowed by importing section 10(20) definition into section 80-IB(10).

For deduction under section 80-IB(10), approval by a planning authority competent to sanction the housing project can satisfy the requirement of approval by a local authority. The text explains that the definition of "local authority" in the Explanation to section 10(20) is confined to that provision and cannot be imported into section 80-IB(10) unless the statute so provides. Applying that approach, WBHIDCO, appointed by the State Government as the planning authority for the relevant area, was treated as the competent local authority for approval purposes, so the deduction could not be denied on the basis of section 10(20).

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Issues: Whether the approval granted by WBHIDCO could be treated as approval by a local authority for the purpose of deduction under section 80-IB(10), and whether the definition of "local authority" in section 10(20) could be imported into section 80-IB(10).

Analysis: The deduction under section 80-IB(10) was available to an undertaking developing and building housing projects approved by a local authority. The definition of "local authority" in the Explanation to section 10(20) was expressly confined to that clause and could not be extended to section 80-IB(10). WBHIDCO had been appointed by the State Government as the planning authority for the relevant area under the West Bengal Town and Country (Planning and Development) Act, 1979, and was the competent authority for sanction of the housing project. The provision being a beneficial one, it had to be construed so as to advance its object rather than defeat the relief on a technical importation of a definition meant for another clause.

Conclusion: WBHIDCO was to be treated as the local authority for the purpose of section 80-IB(10), and the deduction could not be denied by reference to section 10(20).

Final Conclusion: The revenue's challenge to the grant of deduction failed, and the assessee's entitlement to relief under section 80-IB(10) was upheld.

Ratio Decidendi: A definition expressly confined to one clause of the Income-tax Act cannot be imported into another provision unless the statute so provides, and a planning authority competent to approve the housing project satisfies the requirement of approval by a local authority under section 80-IB(10).

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