Composite commencement requirement under section 80IB(10): preliminary housing project activities do not equal start of development and construction.

Section 80IB(10) requires that both development and construction of a housing project commence on or after 01.10.1998, and the phrase must be read as a composite condition. The High Court rejected the view that preliminary activities such as removal of occupants, borewell digging, electricity connection, or compound wall construction amount to commencement of development and construction. It held that actual site construction started on 15.10.1998, so the statutory condition was satisfied and the deduction was allowable.

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Issues: Whether the assessee was entitled to deduction under section 80IB(10) of the Income-tax Act, 1961 on the footing that the housing project commenced development and construction only on or after 01.10.1998, and whether pre-construction activities could be treated as commencement of development and construction so as to deny the deduction.

Analysis: The relevant statutory condition required that the undertaking must have commenced or must commence both development and construction of the housing project on or after 01.10.1998. The finding of fact accepted by the first appellate authority was that actual construction at site commenced on 15.10.1998. The reasoning that preliminary activities such as removal of hut dwellers, digging of borewell, obtaining electricity connection, and construction of compound wall could be treated as the commencement of development and construction was rejected. The expression "development and construction" was held to be a composite requirement, and the conjunction "and" could not be diluted by importing the definition of "development" from the Tamil Nadu Town and Country Planning Act, 1971 when the language of section 80IB(10) was plain.

Conclusion: The assessee satisfied the statutory condition and was entitled to deduction under section 80IB(10); the revenue's contrary interpretation was rejected.

Final Conclusion: The appeal succeeded and the assessee's claim for deduction was upheld.

Ratio Decidendi: Where a deduction provision requires commencement of both development and construction on or after a specified date, pre-construction or ancillary activities cannot be treated as satisfying the condition unless the statute expressly so provides; a plain composite statutory phrase must be given effect according to its ordinary meaning.

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