Housing project deduction under section 80IB(10) turns on the commencement certificate date, not conditional development permission.

For deduction under section 80IB(10), the five-year completion period is counted from the end of the financial year in which the housing project is approved by the local authority. Development permission granted subject to conditions, which did not authorise commencement of construction, was not treated as the relevant approval. The commencement certificate issued after compliance with the required conditions was the operative approval date because only then could construction lawfully begin. On that basis, the project was completed within the prescribed time 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 for the housing project, and whether the relevant date of approval for computing the five-year completion period was the date of development permission or the date of commencement certificate.

Analysis: The housing project deduction under section 80IB(10)(a)(iii) depends on completion within the prescribed period counted from the end of the financial year in which the housing project is approved by the local authority. The development permission dated 28-03-2006 was granted subject to conditions and did not authorize commencement of construction. The commencement certificate dated 05-10-2006 was issued only after compliance with the required conditions and other approvals, and the local authority clarified that development permission alone could not be treated as approval for commencement of work. On these facts, the approval contemplated by the provision was the date on which construction could lawfully begin.

Conclusion: The relevant approval date was 05-10-2006, the assessee completed the project within the prescribed time, and the deduction under section 80IB(10) was allowable.

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