Income Tax Act, 1961
Section 4: Subs. by Act 4 of 1988, s. 2, for “Income-tax Officer” (w.e.f. 11988).
4. Subs. by Act 4 of 1988, s. 2, for “Income-tax Officer” (w.e.f. 11988).
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1[80HHBA. Deduction in respect of profits and gains from housing projects in certain
cases.—(1) Where the gross total income of an assessee being an Indian company or a person (other than
a company) who is a resident in India includes any profits and gains derived from the execution of a
housing project awarded to the assessee on the basis of global tender and such project is aided by the
World Bank, there shall, in accordance with and subject to the provisions of this section, be allowed, in
computing the total income of the assessee, 2[a deduction from such profits and gains of an amount equal
to––
(i) forty per cent. thereof for an assessment year beginning on the 1st day of April, 2001;
(ii) thirty per cent. thereof for an assessment year beginning on the 1st day of April, 2002;
(iii) twenty per cent. thereof for an assessment year beginning on the 1st day of April, 2003;
(iv) ten per cent. thereof for an assessment year beginning on the 1st day of April, 2004,
and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April,
2005 and any subsequent assessment year.]
(2) The deductions under this section shall be allowed only if the following conditions are fulfilled,
namely:—
(i) the assessee maintains separate accounts in respect of the profits and gains derived from the
business of the execution of the housing project undertaken by him and, where the assessee is a
person other than an Indian company or a co-operative society, such accounts have been audited by
an accountant as defined in the Explanation below sub-section (2) of section 288 and the assessee
furnishes along with his return of income the report of such audit in the prescribed form duly signed
and verified by such accountant;
(ii) an amount equal to 3[such percentage of the profits and gains as is referred to in
sub-section (1) in relation to the relevant assessment year] is debited to the profit and loss account of
the previous year in respect of which the deduction under this section is to be allowed and credited to
a reserve account (to be called the Housing Projects Reserve Account) to be utilised by the assessee
during a period of five years next following for the purposes of his business other than for distribution
by way of dividends or profit:
Provided that where the amount credited by the assessee to the Housing Projects Reserve Account in
pursuance of clause (ii) is less than 3[such percentage of the profits and gains as is referred to in
sub-section (1) in relation to the relevant assessment year], the deduction under this section shall be
limited to the amount so credited in pursuance of clause (ii).
(3) If at any time before the expiry of five years from the end of the previous year in which the
deduction under sub-section (1) is allowed, the assesseeutilises the amount credited to the Housing
Projects Reserve Account for distribution by way of dividends or profit or for any other purpose which is
not a purpose of the business of the assessee, the deduction originally allowed under sub-section (1) shall
be deemed to have been wrongly allowed and the Assessing Officer may, notwithstanding anything
contained in this Act, recompute the total income of the assessee for the relevant previous year and make
necessary amendment and the provision of section 154 shall, so far as may be, apply thereto, the period of
four years specified in sub-section (7) of that section being reckoned from the end of the previous year in
which the money was so utilised.
Where the gross total income of an assessee being an Indian company or a person (other than
a company) who is a resident in India includes any profits and gains derived from the execution of a
housing project awarded to the assessee on the basis of global tender and such project is aided by the
World Bank, there shall, in accordance with and subject to the provisions of this section, be allowed, in
computing the total income of the assessee, 2[a deduction from such profits and gains of an amount equal
to––
forty per cent. thereof for an assessment year beginning on the 1st day of April, 2001;
thirty per cent. thereof for an assessment year beginning on the 1st day of April, 2002;
twenty per cent. thereof for an assessment year beginning on the 1st day of April, 2003;
ten per cent. thereof for an assessment year beginning on the 1st day of April, 2004,
and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April,
2005 and any subsequent assessment year.]
The deductions under this section shall be allowed only if the following conditions are fulfilled,
namely:—
the assessee maintains separate accounts in respect of the profits and gains derived from the
business of the execution of the housing project undertaken by him and, where the assessee is a
person other than an Indian company or a co-operative society, such accounts have been audited by
an accountant as defined in the Explanation below sub-section
of section 288 and the assessee
furnishes along with his return of income the report of such audit in the prescribed form duly signed
and verified by such accountant;
an amount equal to 3[such percentage of the profits and gains as is referred to in
sub-section
in relation to the relevant assessment year] is debited to the profit and loss account of
the previous year in respect of which the deduction under this section is to be allowed and credited to
a reserve account (to be called the Housing Projects Reserve Account) to be utilised by the assessee
during a period of five years next following for the purposes of his business other than for distribution
by way of dividends or profit:
Provided that where the amount credited by the assessee to the Housing Projects Reserve Account in
pursuance of clause
is less than 3[such percentage of the profits and gains as is referred to in
sub-section
in relation to the relevant assessment year], the deduction under this section shall be
limited to the amount so credited in pursuance of clause
If at any time before the expiry of five years from the end of the previous year in which the
deduction under sub-section
is allowed, the assesseeutilises the amount credited to the Housing
Projects Reserve Account for distribution by way of dividends or profit or for any other purpose which is
not a purpose of the business of the assessee, the deduction originally allowed under sub-section
shall
be deemed to have been wrongly allowed and the Assessing Officer may, notwithstanding anything
contained in this Act, recompute the total income of the assessee for the relevant previous year and make
necessary amendment and the provision of section 154 shall, so far as may be, apply thereto, the period of
four years specified in sub-section
of that section being reckoned from the end of the previous year in
which the money was so utilised.