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2013 (10) TMI 281 - HC - Income TaxDeduction u/s 80IB of the Income Tax Act - Housing project - Joint development agreement - whether for the purpose of benefit under Section 80IB (10) of the Act, the assessee could be considered as the owner of the land in question. - Held that - ssessee had undertaken the development of housing project at its own risk and cost. The land owner had accepted only the full price of the land and nothing further. The entire risk of investment and expenditure was that of the assessee. Resultantly, profit and loss also would accrue to the assessee alone. Reliance has been placed upon the judgment in the case of Mysore Minerals Ltd. vs. Commissioner of Income Tax 1999 (9) TMI 1 - SUPREME Court , the ownership has been understood differently in different context - For the limited purpose of deduction under Section 80IB(10) of the Act, the assessee had satisfied the condition of ownership - Assessee was given full rights to develop the land by putting up the housing project at its own risk and cost. Entire profit flowing therefrom was to be received by the assessee. It is true that the agreement provided that the assessee would receive remuneration - Agreement was one of works contract - Assessees were entitled to the benefit under Section 80IB(10) of the Act even where the title of the lands had not passed on to the assessees Decided against the Revenue.
Issues Involved:
1. Eligibility for benefits under Section 80IB(10) of the Income Tax Act. 2. Ownership of land as a prerequisite for claiming benefits under Section 80IB(10). 3. Interpretation of "developer" and "works contractor" in the context of Section 80IB(10). 4. Application of Section 2(47) of the Income Tax Act and Section 53A of the Transfer of Property Act. Issue-wise Detailed Analysis: 1. Eligibility for benefits under Section 80IB(10) of the Income Tax Act: The central question was whether the respondent assessee is eligible for the benefit under Section 80IB(10). The Tribunal and CIT(Appeals) had allowed the deduction under Section 80IB(10) read with Section 80IB(1). The Revenue's argument was that the approval of the local authority and completion certificate were granted to the landowners, not the assessee. However, the Tribunal found that the assessee had undertaken the development of the housing project at its own risk and cost, which qualified them for the deduction under Section 80IB(10). 2. Ownership of land as a prerequisite for claiming benefits under Section 80IB(10): The Assessing Officer and CIT(Appeals) stressed that ownership of the land is intrinsic to qualify for the deduction under Section 80IB(10). They argued that the assessee must own the land to carry on the business of developing and building housing projects. However, the Tribunal held that ownership of the land is not a necessary condition for claiming benefits under Section 80IB(10). The Tribunal emphasized that the term "developer" does not inherently imply ownership of the land. 3. Interpretation of "developer" and "works contractor" in the context of Section 80IB(10): The Tribunal differentiated between a "developer" and a "works contractor." It concluded that the assessee was not merely a contractor but had dominion over the land, developed the housing project at its own cost, and bore the risks. The Tribunal noted that the term "developer" carries a broader meaning, including the undertaking of developing and building housing projects without necessarily owning the land. The Tribunal also referred to various dictionary definitions to support this interpretation. 4. Application of Section 2(47) of the Income Tax Act and Section 53A of the Transfer of Property Act: The Tribunal applied Section 2(47) of the Income Tax Act and Section 53A of the Transfer of Property Act to determine the ownership status of the assessee. It found that the assessee had taken possession of the land in part performance of the agreement to sell and had carried out construction work. This led to the conclusion that, for the purposes of the Income Tax Act, the land was deemed to have been transferred to the assessee. Thus, the assessee was considered the owner of the land for the purpose of claiming benefits under Section 80IB(10). Conclusion: The Tribunal upheld the assessees' eligibility for benefits under Section 80IB(10) even if the land title had not passed to them and development permissions were obtained in the name of the original landowners. The Tribunal's decision was based on the interpretation that ownership of the land is not a prerequisite for claiming the deduction, and the assessee's role as a developer was sufficient. The Tribunal's order was upheld, and the appeal was dismissed, affirming the assessees' entitlement to the benefits under Section 80IB(10).
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