Local authority approval for housing projects can include Collector sanction, supporting deduction under section 80IB(10).

Deduction under section 80IB(10) was upheld where a housing project received non-agricultural and residential construction permission from the Collector, and that approval was treated as approval by the local authority for the statutory condition. The project lay in an area governed by the Maharashtra Land Revenue Code and the Maharashtra Regional and Town Planning Act, 1966, and the permission letter imposed construction and completion conditions. Relying on the jurisdictional High Court view, the appellate authority accepted that the Collector's sanction satisfied the approval requirement, and the Tribunal found no reason to interfere. The deduction was therefore allowed and the Revenue's challenge failed.

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Issues: Whether deduction under section 80IB(10) of the Income-tax Act, 1961 was allowable where the housing project received approval from the Collector and such approval was treated as approval by a local authority.

Analysis: The housing project was situated in an area governed by the Maharashtra Land Revenue Code and the Maharashtra Regional and Town Planning Act, 1966. The permission letter issued by the Collector showed that the Collector granted non-agricultural permission and approval for residential construction, subject to detailed conditions relating to construction and completion. Relying on the jurisdictional High Court decision, the CIT(A) held that in such circumstances the Collector's approval could be treated as approval by the local authority for the purpose of section 80IB(10). The Tribunal found this view fair and reasonable and saw no reason to interfere.

Conclusion: The deduction under section 80IB(10) was rightly allowed, and the Revenue's challenge failed.

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