Benefits for housing sector in the Budget

CHAT ROOM

 

• The provisions of Section 80-IB (10) are being liberalised to give the following benefits from assessment year 2005-06:-

 

Deduction will be allowed to an undertaking developing and building housing projects in respect of profits derived from such housing projects.

Any such housing project shall be approved by a local authority before March 31, 2007.

Amount of deduction will be equal to 100 per cent of the profits derived during the previous year from the development and building of housing projects.

The undertaking has commenced or commences development and construction of the housing project on or after October 1, 1998 and completes such construction within four years from the end of the financial year in which the housing project is approved by the local authority.

Where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority.

The date of completion of the housing project shall be taken to be the date on which the completion certificate is issued by the local authority.

The project is on the size of a plot of land, which has a minimum area of one acre.

There is a requirement vis-a-vis the maximum size of the residential unit also.

 This size has been linked to the city in which the housing project is situated.  I am a civil contractor and have always been disclosing more than 8 per cent profit. Subsequently, my return has always been accepted under Section 44AD.  But the return for the assessment year 2003-04 has been selected for scrutiny under Section 143(2), although the profit disclosed is 12 per cent. Is the action legally valid? Am I required to attend the assessment proceedings?  It is not clear from the query whether the gross receipts are not over Rs 40 lakh. Also, there is nothing in Section 44AD, which precludes the tax department to select the case for scrutiny, where the provisions of Section 44AD are applicable. Hence, you are advised to attend the assessment proceedings.  The income-tax is required to be deducted at source at the time of credit or payment, whichever is earlier. Our accounting year ending is as on March 31.  The bills dated as on March 31 or earlier, of several sub-contractors and labour contractors for works carried out in the earlier year are received by us any time between April 1 and July 31. These bills are accounted for as on March 31.  Legally, therefore, the date of credit is March 31, while factually, the credit is sometime between April 1 and July 31. Tax-deduction at source from a bill for March, received in July and accounted as on March 31, would be paid only on or before August 7. Legally, the payment is delayed, because the credit was made as on March 31. How can the assessee comply with the provisions of law, in such cases?  A consistent account practice, followed in regard to such bills, should not create any problems for the queriest. A bill, which is received after March 31, has to be accounted for on that basis.