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"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 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'.
"The expression 'housing project' is not defined under the Act. However, s. 80-IB(10) refers to the housing projects which are approved by the local authorities. Therefore, for the purposes of s. 80-IB(10) which project should be treated as a housing project is left to the local authorities. The expression 'housing project' is not defined even under the DC Rules/Regulations framed by the local authorities. Therefore, which project would qualify to be called as a housing project has to be gathered from the rules/regulations framed by the local authority. Thus, on the date on which the legislature introduced 100 per cent deduction under the IT Act, 1961 on the profits derived from housing projects approved by a local authority, it was known that the local authorities could approve the projects as housing projects with commercial user to the extent permitted under the DC Rules framed by the respective local authority. In other words, it was known that the local authorities could approve a housing project without or with commercial user to the extent permitted under the DC Rules. If the legislature intended to restrict the benefit of deduction only to the projects approved exclusively for residential purposes, then it would have stated so. However, the legislature has provided that s. 80-IB(10) deduction is available to all the housing projects approved by a local authority. Since the local authorities could approve a project to be a housing project with or without the commercial user, it is evident that the legislature intended to allow s. 80-IB(10) deduction to all the housing projects approved by a local authority without or with commercial user to the extent permitted M/s Akash Enterprises.
under the DC Rules. It is not in dispute that where a project is approved as a housing project without or with commercial user to the extent permitted under the rules/regulations, then, deduction under s. 80- IB(10) would be allowable. In other words, if a project could be approved as a housing project having residential units with permissible commercial user, then it is not open to the IT authorities to contend that the expression 'housing project' is applicable to projects having only residential units. Once it is held that the local authorities could approve a project to be housing project without or with the commercial user to the extent permitted under the DC Rules, then the project approved with the permissible commercial user would be eligible for s. 80-IB(10) deduction irrespective of the fact that the project is approved as 'housing project' or approved as 'residential plus commercial'. The fact that the deduction under s. 80-IB(10) prior to 1st April, 2005 was allowable on the profits derived from the housing projects constructed during the specified period, on a specified size of the plot with residential units of the specified size, it cannot be inferred that the deduction under s. 80-IB(10) was allowable to housing projects having residential units only, because, restriction on the size of the residential unit is with a view to make available large number of affordable houses to the common man and not with a view to deny commercial user in residential buildings. Therefore, the argument of the Revenue that the restriction on the size of the residential unit in s. 80-IB(10) as it stood prior to 1st April, 2005 is suggestive of the fact that the deduction is restricted to housing projects approved for residential units only cannot be accepted. The above conclusion is further fortified by cl. (d) to s. 80- IB(10) inserted w.e.f. 1st April, 2005. Clause (d) to s. 80-IB(10) inserted w.e.f. 1st April, 2005 provides that even though shops and commercial establishments are included in the housing project, deduction under s. 80-IB(10) w.e.f. 1st April, 2005 would be allowable where such commercial user does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet whichever is lower. By Finance Act, 2010, cl. (d) is amended to the effect that the commercial user should not exceed three per cent of the aggregate built-up area of the housing project or five thousand square feet whichever is higher. The expression 'included' in cl. (d) makes it amply clear that commercial user is an integral part of a housing project. Thus, by inserting cl. (d) to s. 80-IB(10) the legislature has made it clear that though the housing projects approved by the local authorities with commercial user to the extent permissible under the DC Rules/Regulations were entitled to s. 80-IB(10) deduction, w.e.f. 1st April, 2005 such deduction would be subject to the restriction set out in cl. (d) of s. 80-IB(10). Therefore, the argument of the Revenue that w.e.f. 1st April, 2005 the legislature for the first time allowed s. 80- IB(10) deduction to housing projects having commercial user cannot be accepted.
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 per cent 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 s. 80-IB(10) deduction and that has been done by inserting cl. (d) to s. 80-IB(10) w.e.f. 1st April, 2005. Therefore, the decision of the Tribunal in holding that a project with residential and commercial user to the extent permitted under DC Rules would be a housing project and hence eligible for deduction under s. 80-IB(10) upto 31st March, 2005 cannot be faulted. Once the basic argument of the Revenue that the housing projects with commercial user are not entitled to s. 80-IB(10) deduction is rejected, then in the absence of any restriction imposed under the Act, it was not open to the Tribunal to hold that the projects approved by the local authorities having residential buildings with commercial user upto 10 per cent of the plot area would alone be entitled to deduction under s. 80-IB(10). As noted earlier, restriction regarding commercial user has been imposed for the first time by introducing cl. (d) to s. 80- IB(10) w.e.f. 1st April, 2005. Therefore, it was not open to the Tribunal to hold that prior to 1st April, 2005, projects having commercial user upto 10 per cent of the plot area alone would be eligible for s. 80-IB(10) deduction.