Court allows deduction under Section 80IB(10) for housing projects, emphasizing statutory compliance and judicial precedent.

The court held that the assessee complied with the requirements of Section 80IB(10) of the Income-Tax Act, allowing for deduction of profits from housing projects. The court dismissed the revenue's appeal, emphasizing adherence to statutory language and previous judicial interpretations. It affirmed the principle of proportionality for units less than 1500 sq.ft. and the separate consideration of residential blocks. The court's decision favored the assessee, answering substantial questions of law against the revenue.

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Issues Involved:
1. Eligibility for deduction under Section 80IB of the Income-Tax Act.
2. Proportionate deduction under Section 80IB for units less than 1500 sq.ft.
3. Commercial area exceeding 5% in the project.
4. Project area being less than 1 acre.

Detailed Analysis:

1. Eligibility for Deduction under Section 80IB:
The appellate authorities held that the assessee firm is eligible for deduction under Section 80IB of the Income-Tax Act. The revenue argued that the conditions in clauses (a) to (d) of sub-Section (1) of Section 80IB were not met. However, the Tribunal and Commissioner of Income Tax (Appeals) had previously allowed similar claims for earlier assessment years, which were upheld by higher courts. The court noted that the object of Section 80IB(10) is to provide 100% deduction of profits derived from developing and building housing projects. The court emphasized that the legal principles regarding the interpretation of clauses (b) and (c) of Section 80IB(10) remained unchanged post-amendment.

2. Proportionate Deduction under Section 80IB for Units Less Than 1500 sq.ft.:
The revenue contended that the entire project must meet the condition of having units less than 1500 sq.ft. The appellate authorities allowed proportionate deduction for individual units meeting this criterion. The court noted that the Tribunal had consistently held that the principle of proportionality applies, and this view was affirmed by the Supreme Court in the assessee's case for previous assessment years. The court found that the legislature's omission of the word "each" in clause (c) indicated an intention to allow proportionate deductions.

3. Commercial Area Exceeding 5% in the Project:
The revenue argued that the commercial area in the project exceeded the permissible 5%. The appellate authorities held that each residential block should be considered separately for computing the percentage of commercial area. The court noted that the Tribunal had upheld this view in the assessee's case for previous years, and the Supreme Court had dismissed the revenue's appeals. The court agreed with the Tribunal's interpretation that individual residential blocks should be treated as separate projects.

4. Project Area Being Less Than 1 Acre:
The revenue contended that the project area was less than 1 acre, as required by Section 80IB(10). The appellate authorities found that the project area was initially more than 1 acre but was reduced due to compliance with local authority conditions. The court noted that the approved plan showed an area of 48,939 sq.ft., which is more than 1 acre. The court referred to CBDT's clarification that any project approved by the local authority as a housing project should be considered adequate for Section 80IB(10). The court concluded that the assessee complied with the requirement of having a project area of at least 1 acre.

Conclusion:
The court held that the assessee complied with the requirements of Section 80IB(10) and dismissed the revenue's appeal. The substantial questions of law were answered against the revenue and in favor of the assessee. The court emphasized the importance of adhering to the statutory language and previous judicial interpretations, affirming the principle of proportionality and the separate consideration of residential blocks.

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