INCOME TAX ACT, 1961

Section 80-IB(10)

Deduction under section 80-IB(10) - Allowability - Contractor v. Developer -

Assessee claimed deduction under section 80-IB(10). AO denied deduction on the ground that assessee had merely entered into a construction agreement for construction of the residential apartments with its customers and recitals in the concerned agreements clearly show that SITPPL was the owner of the lands and assessee was a builder contractor and not a developer. Held: AO failed to appreciate and read construction agreement in entirety, which clearly brought out that assessee was shown as developer, who had formulated a scheme for construction of residential apartments. Further, related agreement for sale entered into with customer also clearly brought out that assessee had entered into an agreement with SITPL for purchase of land and that the assessee is developing the property into an apartment complex for which entire consideration was payable to assessee. Thus, merely relying on a single line that described SITPL as 'Owner' in construction agreements, which was necessary for conveying title to the customer, it could not be said that assessee was merely a contractor and SITPL was to be regarded as developer of the housing project. Ownership of land is not a pre-condition for claiming deduction under section 80-IB(10). Accordingly, assessee was to be regarded as developer duly entitled for deduction.

Relied:Radhe Developers (2012) 341 ITR 403 (Guj-HC) : 2012 TaxPub(DT) 262 (Guj-HC) and Sanghvi & Doshi Enterrises (2013) Taxmann.com 386 (Chen-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-2008 to 2010-2011

INCOME TAX ACT, 1961

Section 14A Rule 8D(2)(ii)

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