Section 80IB(10) deduction depends on timely claim in return under Section 80AC for later years

Section 80IB(10) deductions were held to depend on compliance with Section 80AC once that provision came into force on 01.04.2006. For income relating to the previous year 2005-06, the bar in Section 80AC did not apply, so the deduction remained available for assessment year 2006-07. For assessment years 2007-08 onwards, the absence of a claim in the return filed within the due date under Section 139(1) prevented allowance of the deduction. The court distinguished authorities relied on by the assessee because they did not address the specific restriction introduced by Section 80AC.

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Issues: Whether the assessee was entitled to deduction under Section 80IB(10) of the Income-tax Act, 1961 when no claim for such deduction was made in the return of income as required by Section 80AC of the Income-tax Act, 1961, and whether that restriction could apply to the assessment year 2006-07 and subsequent years.

Analysis: Section 80IB(10) grants deduction to eligible housing project undertakings, while Section 80AC, inserted with effect from 01.04.2006, requires a return to be filed on or before the due date for deductions under specified provisions, including Section 80IB. The statutory bar was held not to govern income relatable to the previous year 2005-06, which fell in assessment year 2006-07. For assessment years 2007-08 onwards, the Court held that the express language of Section 80AC could not be ignored in a statutory appeal under Section 260A, and the absence of a claim in the return prevented allowance of the deduction for those years. The authorities relied on by the assessee were distinguished because they did not deal with the specific restriction created by Section 80AC.

Conclusion: The assessee was entitled to the benefit of Section 80IB(10) for assessment year 2006-07, but not for assessment years 2007-08 to 2011-12 in the absence of a claim in the return of income.

Final Conclusion: The appeal succeeded only for the earliest year, while the remaining years were not granted the deduction and the connected departmental matters stood disposed of in line with that result.

Ratio Decidendi: A deduction under Section 80IB(10) cannot be allowed for periods governed by Section 80AC unless the claim is made in a return filed within the due date under Section 139(1), though the restriction does not operate retrospectively to income of the previous year preceding the insertion of Section 80AC.

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