80HHBA

ITA 1961 · Section 80HHBA

Section 80HHBA — Housing Project (Legacy)

Chapter VI-A — Deductions To Be Made in Computing Total IncomeITA 1961Up to AY 2026-27

STATUTORY ARCHITECTURE — 18-ROW MAP

Statutory text — Income-tax Act, 1961

Deduction in respect of profits and gains from housing projects in certain cases.

80HHBA. (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, 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 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 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 assessee utilises 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.

(4) Notwithstanding anything contained in any other provision of this Chapter under heading

"C.—Deduction in respect of certain incomes", no part of the income payable to the assessee for the

execution of a housing project under sub-section (1) shall qualify for deduction for any assessment year

under any other provision.

Explanation.—For the purposes of this section,—

(a) "housing project" means a project for—

(i) the construction of any building, road, bridge or other structure in any part of India;

(ii) the execution of such other work (of whatever nature) as may be prescribed;

(b) "World Bank" means the International Bank for Reconstruction and Development Bank referred to

in the International Monetary Fund and Bank Act, 1945.

Function in the statutory architecture

Section 80HHBA allowed an Indian company or a resident non-corporate assessee a deduction from the profits and gains of executing a housing project awarded on the basis of global tender and aided by the World Bank. A "housing project" means construction of any building, road, bridge or other structure in India, or other prescribed work. The deduction was forty, thirty, twenty and ten per cent for assessment years 2001-02 to 2004-05 respectively, and no deduction is allowed for assessment year 2005-06 or any later year.

Operative consequences

Separate accounts were required, with an audit report for assessees other than Indian companies and co-operatives.
The deductible amount had to be credited to a "Housing Projects Reserve Account" for business use within five years; the deduction was limited to the amount so credited.
Use of the reserve for dividends or non-business purposes within five years made the deduction wrongly allowed, with recomputation under s. 154 (s. 80HHBA(3)).

Status

Expired. By sub-section (1) no deduction is allowed from assessment year 2005-06. The Finance Act, 2026 does not amend s. 80HHBA.

The Income-tax Act, 1961 governs assessment year 2026-27 and earlier years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject, there is no corresponding provision.

Case Laws & Commentary

SECTION 80HHBA — DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM HOUSING PROJECTS IN CERTAIN CASES

Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)

STATUTORY SCHEME (editorial summary — verbatim bare-Act text in the companion Block-1 file)

Marginal heading: Deduction in respect of profits and gains from housing projects in certain cases.

Section 80HHBA allowed an Indian company, or a non-corporate resident, a deduction in respect of profits and gains derived from the execution of a housing project (a project for the construction of any building, road, bridge or other structure in India, or other prescribed work) awarded on the basis of global tender and aided by the World Bank, subject to reserve and other conditions. It is a narrow, spent provision.

A. SECTION COMMENTARY

A.1 Structural position

Section 80HHBA was a narrow incentive for World-Bank-aided housing projects (buildings, roads, bridges and other structures) awarded on global tender, sitting alongside section 80HHB. It is spent.

A.2 Provision taxonomy

A deduction on profits derived from a qualifying World-Bank-aided housing project, with reserve and audit conditions.

A.3 Core doctrinal themes

Eligibility (qualifying project, global tender, World Bank aid) and the 'derived from' nexus; little reported litigation.

A.4 Legislative evolution / FA amendment trail

Inserted by the Finance Act, 1995; spent. Not amended by the Finance Act, 2026.

A.5 CA practitioner pointers

(1) Confirm the project meets the global-tender / World-Bank-aid conditions. (2) Apply the 'derived from' nexus. (3) Relevant only for open legacy assessments.

B. FA 2026 IMPACT NOTE

Section 80HHBA is NOT amended by the Finance Act, 2026 and is spent.

C. CASE LAW — CLUSTERED BY ISSUE

Cluster C-1 : Narrow, spent incentive

Statutory conditions and shared nexus jurisprudence

Facts: A contractor executes a qualifying World-Bank-aided housing project.

Issue: What governs eligibility and quantum.

Held: Eligibility turns on the qualifying-project, global-tender and World-Bank-aid conditions and the reserve requirement; the 'derived from' nexus and section 80AB net-income discipline govern quantum.

Ratio: A narrow conditional deduction governed by the general profit-linked principles.

Relevance: Recorded for completeness; reported litigation is negligible and the section 80HH/80AB principles apply.

Editorial note on sourcing

Editorial scheme summary prepared from the Income-tax Act, 1961 as amended by the Finance Act, 2025, read with the Finance Act, 2026; verbatim bare-Act text is carried in the companion Block-1 treatise file. These sections are spent / phased out for current assessment years but carry heavy legacy litigation; the digested authorities are reported Supreme Court / High Court decisions verified against standard law reports (ITR/Taxman/CTR) and remain the governing law for the open assessments and for the cognate 'derived from' / netting principles applied across Chapter VIA.

← All sections (940)Act 1961 hub

Income-tax Act, 1961	Income-tax Act, 2025
s. 80HHBA — World Bank-aided housing projects awarded on global tender; no deduction from assessment year 2005-06	No corresponding provision in the Income-tax Act, 2025