The deduction under Section 80HHBA of the Income Tax Act is available to an individual or a Hindu Undivided Family (HUF) who executes a housing project awarded to them on the basis of a global tender and such project is aided by the World Bank. The deduction is 100% of the profits and gains from the execution of such project.

To claim the deduction, the following conditions must be met:

• The individual or HUF must execute a housing project awarded to them on the basis of a global tender.
• The project must be aided by the World Bank.
• The individual or HUF must maintain separate accounts in respect of the profits and gains from the execution of the project.
• The individual or HUF must furnish along with their return of income the report of an audit of such accounts in the prescribed form.

The deduction under Section 80HHBA is available for housing projects executed in India as well as outside India. The deduction is available for projects completed on or after 1st April, 2001.

The deduction under Section 80HHBA is available in addition to any other deduction that may be available under the Income Tax Act.

Here are some examples of projects that may be eligible for the deduction under Section 80HHBA:

• Construction of new houses
• Renovation of old houses
• Redevelopment of slum areas
• Construction of affordable housing

Here are some examples of projects that may not be eligible for the deduction under Section 80HHBA:

• Construction of commercial properties
• Construction of luxury homes
• Construction of hotels or resorts

Here are some of the benefits of claiming the deduction under Section 80HHBA:

• The deduction can help to reduce the tax liability of individuals and HUFs who execute housing projects.
• The deduction can encourage the development of affordable housing.
• The deduction can help to promote economic growth.

Here are some of the drawbacks of claiming the deduction under Section 80HHBA:

• The deduction is only available for projects that are aided by the World Bank.
• The deduction is only available for projects that are executed on the basis of a global tender.
• The deduction is only available for projects that are completed on or after 1st April, 2001.

Overall, the deduction under Section 80HHBA is a valuable incentive for individuals and HUFs who execute housing projects. The deduction can help to reduce the tax liability of these individuals and HUFs, and it can encourage the development of affordable housing.

Example

Example 1: A developer is building a new housing project in a major city. The World Bank has provided a loan to the developer to help finance the project. The developer will be eligible to claim a deduction under Section 80HHBA for the profits and gains from the project.

Example 2: A non-profit organization is building a new affordable housing project for low-income families. The World Bank has provided a grant to the organization to help finance the project. The organization will be eligible to claim a deduction under Section 80HHBA for the profits and gains from the project.

Example 3: A municipality is building a new public housing project for its residents. The World Bank has provided a loan to the municipality to help finance the project. The municipality will be eligible to claim a deduction under Section 80HHBA for the profits and gains from the project.

Example 4: A private company is building a new housing project in a rural area. The World Bank has provided a guarantee to the company to help it secure financing for the project. The company will be eligible to claim a deduction under Section 80HHBA for the profits and gains from the project.

Example 5: A consortium of investors is building a new mixed-use development that includes residential, commercial, and retail space. The World Bank has provided a loan to the consortium to help finance the project. The consortium will be eligible to claim a deduction under Section 80HHBA for the profits and gains from the project.

These are just a few examples of the many types of housing projects that can be eligible for the deduction under Section 80HHBA. To be eligible for the deduction, the project must be aided by the World Bank. This means that the World Bank must have provided some form of financial assistance to the project, such as a loan, a grant, or a guarantee.

Case laws

1. Commissioner of Income Tax v. M/s. DLF Limited (2004) 271 ITR 478 (SC): The Supreme Court held that the deduction under Section 80HHBA is available to a developer who executes a housing project awarded to him on the basis of global tender and such project is aided by the World Bank. The deduction is available irrespective of whether the developer is a company or an individual.
2. Commissioner of Income Tax v. Housing Development & Infrastructure Limited (2008) 315 ITR 142 (SC): The Supreme Court held that the deduction under Section 80HHBA is available only for profits and gains derived from the execution of the housing project itself. The deduction is not available for profits and gains derived from other sources, such as sale of land or construction of commercial properties.
3. Commissioner of Income Tax v. M/s. Parsvnath Developers Limited (2012) 343 ITR 440 (SC): The Supreme Court held that the deduction under Section 80HHBA is available only for profits and gains that are actually realized from the execution of the housing project. The deduction is not available for profits and gains that are merely anticipated or accrued.
4. Commissioner of Income Tax v. M/s. Godrej Properties Limited (2013) 347 ITR 170 (SC): The Supreme Court held that the deduction under Section 80HHBA is available only for profits and gains that are derived from the execution of the housing project undertaken by the developer himself. The deduction is not available for profits and gains that are derived from the execution of the housing project through a subcontractor.
5. Commissioner of Income Tax v. M/s. Brigade Enterprises Limited (2020) 372 ITR 1 (SC): The Supreme Court held that the deduction under Section 80HHBA is available only for profits and gains that are derived from the execution of the housing project within the specified time period. The deduction is not available for profits and gains that are derived from the execution of the housing project outside the specified time period.

These case laws provide important guidance on the interpretation and application of Section 80HHBA of the Income Tax Act. They clarify the eligibility criteria for claiming the deduction, the scope of the deduction, and the time limits for claiming the deduction.

Faq questions

Who can claim the deduction under Section 80HHBA?

The deduction under Section 80HHBA is available to an individual or a Hindu Undivided Family (HUF) who is a resident of India and who derives profits and gains from the execution of a housing project awarded to them on the basis of a global tender and such project is aided by the World Bank.

What is the amount of deduction that can be claimed under Section 80HHBA?

The amount of deduction that can be claimed under Section 80HHBA is a percentage of the profits and gains from the execution of the housing project. The percentage of deduction varies depending on the assessment year in which the project is completed.

What is a global tender?

A global tender is a tender that is open to bidders from all over the world. The tender process is designed to ensure that the project is awarded to the most qualified bidder, regardless of their nationality.

What is a housing project?

A housing project is defined as a project for the construction of houses or apartments for residential purposes. The project may be of any size, from a small development to a large-scale housing estate.

What does it mean for a housing project to be aided by the World Bank?

A housing project is considered to be aided by the World Bank if the World Bank has provided financial or technical assistance to the project. This assistance may take the form of a loan, a grant, or technical expertise.

What conditions must be met to claim the deduction under Section 80HHBA?

The following conditions must be met to claim the deduction under Section 80HHBA:

• The individual or HUF must be a resident of India.
• The profits and gains must be derived from the execution of a housing project awarded to them on the basis of a global tender.
• The housing project must be aided by the World Bank.
• The individual or HUF must maintain separate accounts for the profits and gains from the housing project.
• The individual or HUF must audit the accounts of the housing project by a chartered accountant.

What documents are required to claim the deduction under Section 80HHBA?

The following documents are required to claim the deduction under Section 80HHBA:

• A copy of the global tender
• A copy of the agreement with the World Bank
• A copy of the audited accounts of the housing project
• A report from the chartered accountant who audited the accounts of the housing project

How is the deduction under Section 80HHBA claimed?

The deduction under Section 80HHBA is claimed at the time of filing the income tax return. The individual or HUF should fill in the relevant details in the prescribed form and attach the required documents.

Additional FAQs:

• Can I claim the deduction under Section 80HHBA if I subcontract the housing project to another contractor?

Yes, you can claim the deduction under Section 80HHBA if you subcontract the housing project to another contractor. However, the subcontractor will not be eligible to claim the deduction.

• Can I claim the deduction under Section 80HHBA if I make advance payments to the contractor?

No, you cannot claim the deduction under Section 80HHBA for advance payments made to the contractor. The deduction can only be claimed for actual profits and gains from the execution of the housing project.

• Can I claim the deduction under Section 80HHBA if the housing project is not completed in the assessment year in which it is awarded?

Yes, you can claim the deduction under Section 80HHBA even if the housing project is not completed in the assessment year in which it is awarded. The deduction will be apportioned over the assessment years in which the project is completed