Deduction under section 80IB (10) in respect of undertakings developing building and housing projects – CBDT Clarifies

By Vijay Kumar

Under sub-section (10) of section 80- IB an undertaking developing and building housing projects is allowed a deduction of 100% of its profits derived from such projects if it commenced the project on or after 1.10.1998 and completes the construction within four years from the financial year in which the housing project is approved by the local authority.

Now there is a doubt whether the deduction u/s 80- IB (10) would be available on a year to year basis where an assessee is showing profit on partial completion or if it would be available only in the year of completion of the project u/s 80- IB (10).

The CBDT clarifies:-

(a) The deduction can be claimed on a year to year basis where the assessee is showing profit from partial completion of the project in every year.

(b) In case it is late, found that the condition of completing the project within the specified time limit of 4 years as stated in section 80- IB (10) has not been satisfied, the deduction granted to the assessee in the earlier years should be withdrawn.

CBDT Instruction NO. 4/2009, Dated: June 30, 2009