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17. Development of every region is regulated by the concerned local authority in accordance with the Development Control Rules / Regulation framed by that local authority. The Development Control Rules / Regulations are framed by the local authority depending upon the needs of that region and hence differ from region to region. We have perused DC Rules framed by the authority at Pune and Mumbai. In both the cases, it is seen that the DC Rules framed by the local authorities do not define the expression 'housing project'. Thus, the expression 'housing project' is neither defined under the Income Tax Act nor it is defined under the Development Control Rules / Regulation framed by the local authorities.

Thus, the DC Rules Pune permits commercial user in Residential Buildings.

20. Rule 13.6 of the DC Rules Pune provides that in the case of layouts or sub division of areas in residential and commercial zones, provision shall be made for convenient shopping. The size of the convenient shopping and categories of the convenient shopping are specified in that rule. The total area for convenient shopping permitted is not less than 2% but not exceeding 5% of the area of the plot. Rule M-1.1 in Appendix M to the DC Rules Pune provides for commercial user specified therein even in purely residential zone (R-1). Under Rule M-2.2 of Appendix M, a building or premises in residential zone (R-2) may be approved with convenient shopping and additional user for commercial purposes to the extent of 0.33 FSI in non congested area and not exceeding 0.50 FSI in congested area.

Therefore, the argument of the revenue that with effect from 1/4/2005 the legislature for the first time allowed Section 80IB(10) deduction to 20 itxa1194-10-jud housing projects having commercial user cannot be accepted.

26. The alternative argument of the revenue is that the projects with convenient shopping could be considered as housing projects under Section 80IB(10) upto 1/4/2005. That argument is also without any merit, because, so long as the DC Rules permit convenient shopping as also other commercial user in a housing project, it would not be open to the income tax authorities to contend that the projects with convenient shopping alone could be considered as housing projects. In the present case, it is not in dispute that the project is approved for residential and commercial buildings as per the DC Rules, Pune. The fact that the residential buildings under the DC Rules can have commercial user upto 50% of the built-up area of the plot cannot be a ground to hold that the project is not a housing project. It is for the legislature to impose restrictions on commercial user in a project for the purposes of availing Section 80IB(10) deduction and that has been done by inserting clause

30. In the result, the questions raised in the appeal are answered thus:-

a) Upto 31/3/2005 (subject to fulfilling other conditions), deduction under Section 80IB(10) is allowable to housing projects approved by the local authority having residential units with commercial user to the extent permitted under the DC Rules / Regulations framed by the respective local authority.
b) In such a case, where the commercial user permitted by the local authority is within the limits prescribed under the DC Rules / Regulation, the deduction under Section 80IB(10) upto 31/3/2005 would be allowable irrespective of the fact that the project is approved as 'housing project' or 'residential plus commercial'.