{"id":4186,"date":"2012-01-16T08:20:01","date_gmt":"2012-01-16T08:20:01","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=4186"},"modified":"2012-01-16T08:20:01","modified_gmt":"2012-01-16T08:20:01","slug":"cit-vs-radhe-developers-gujarat-high-court-s-80-ib-10-housing-project-eligible-even-if-developer-not-owner-of-land","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/cit-vs-radhe-developers-gujarat-high-court-s-80-ib-10-housing-project-eligible-even-if-developer-not-owner-of-land\/","title":{"rendered":"CIT vs. Radhe Developers (Gujarat High Court)"},"content":{"rendered":"\n\n
Click here to download the judgement (radhe_developers_80-IB_10.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nS. 80-IB (10): \u201cHousing Project\u201d eligible even if Developer not \u201cowner\u201d of land
\n<\/strong><\/p>\n

The assessee entered into a \u2018development agreement<\/em>\u2019 with the owner of the land pursuant to which it agreed to develop the land. Deduction u\/s 80-IB(10) in respect of the profits arising from the said activity was claimed on the ground that it was \u201cderived from the business of undertaking developing and building housing project approved by the local authority<\/em>\u201d. The AO & CIT (A) rejected the claim on the ground that the assessee was not the \u201cowner\u201d of the land and that the approval of the local authority to, and the completion certificate of, the \u201chousing project\u201d was given to the owner and not to the assessee<\/em>. However, the Tribunal allowed the claim. On appeal by the department to the High Court, HELD dismissing the appeal:<\/p>\n

S. 80IB(10) allows deduction to an undertaking engaged in the business of developing and constructing housing projects. There is no requirement that the land must be owned by the assessee seeking the deduction<\/strong>. Under the development agreement, the assessee had undertaken the development of housing project at its own risk and cost. The land owner had accepted the full price of the land and had no responsibility. The entire risk of investment and expenditure was that of the assessee. Resultantly, profit and loss also accrued to the assessee alone. The assessee had total and complete control over the land and could put the land to the agreed use. It had full authority and responsibility to develop the housing project by not only putting up the construction but by carrying out various other activities including enrolling members, accepting members, carrying out modifications engaging professional agencies and so on. The risk element was entirely that of the assessee<\/strong>. The assessee was a \u201cdeveloper<\/em>\u201d in common parlance as well as legal parlance and could not be regarded as only a \u201cworks contractor<\/em>\u201d. The Explanation to s. 80IB inserted w.r.e.f 1.4.2001 has no application as the project is not a \u201cworks contract\u201d. Further, as the assessee was, in part performance of the agreement to sell the land, given possession and had also carried out the construction work for development of the housing project, it had to be deemed to be the \u201cowner\u201d<\/strong> u\/s 2(47)(v) r.w.s. 53A of the TOP Act even though formal title had not passed (Faqir Chand Gulati vs. Uppal Agencies<\/a><\/strong> (2008) 10 SCC 345 distinguished)<\/p><\/blockquote>\n

\nFor more on s. 80-IB(10) see CIT vs. M\/s Brahma Associates<\/a><\/strong> (Bombay High Court)\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

S. 80IB(10) allows deduction to an undertaking engaged in the business of developing and constructing housing projects. There is no requirement that the land must be owned by the assessee seeking the deduction<\/strong>. Under the development agreement, the assessee had undertaken the development of housing project at its own risk and cost. The land owner had accepted the full price of the land and had no responsibility. The entire risk of investment and expenditure was that of the assessee. Resultantly, profit and loss also accrued to the assessee alone. The assessee had total and complete control over the land and could put the land to the agreed use. It had full authority and responsibility to develop the housing project by not only putting up the construction but by carrying out various other activities including enrolling members, accepting members, carrying out modifications engaging professional agencies and so on. The risk element was entirely that of the assessee<\/strong>. The assessee was a \u201cdeveloper<\/em>\u201d in common parlance as well as legal parlance and could not be regarded as only a \u201cworks contractor<\/em>\u201d. The Explanation to s. 80IB inserted w.r.e.f 1.4.2001 has no application as the project is not a \u201cworks contract\u201d. Further, as the assessee was, in part performance of the agreement to sell the land, given possession and had also carried out the construction work for development of the housing project, it had to be deemed to be the \u201cowner\u201d<\/strong> u\/s 2(47)(v) r.w.s. 53A of the TOP Act even though formal title had not passed (Faqir Chand Gulati vs. Uppal Agencies<\/a><\/strong> (2008) 10 SCC 345 distinguished)<\/p>\n

Read more ›<\/a><\/div>\n

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