February 26, 2010 : Clause 27 of the Finance Bill, 2010 seeks to amend section 80-IB of the Income tax Act relating to deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings.

Under the existing provisions contained in sub-section (10) of the aforesaid section, hundred per cent. deduction is available in respect of profits derived by an undertaking from developing and building housing projects approved by a local authority before 31^st March, 2008. It is further provided in clause (a) that where a housing project has been, or, is approved by the local authority on or after 1st April, 2004, it should be completed within four years from the end of the financial year in which the housing project is approved by the local authority.

It is proposed to increase the period for completion of a housing project, approved on or after 1st April, 2005, from four years to five years.

Under the existing provisions contained in clause (d) of subsection (10) of the aforesaid section, the built-up area of the shops and other commercial establishments included in the housing project should not exceed five per cent. of the aggregate built-up area of the housing project or 2,000 square feet, whichever is less. It is proposed to revise the existing limit to three per cent. of the aggregate built-up area of the housing project or 5,000 square feet, whichever is higher.

These amendments will take effect, retrospectively, from 1^st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-2011 and subsequent years.