Deduction under s 80-IB(10)

The assessee (developer), having dominant control and rights over the land for developing and building a housing project, as approved by a local authority, cannot be denied the deduction under s 80-IB(10) merely because of the absence of legal ownership of the land, as held by AhdTrib in ACIT v YUG Corpn — In favour of: The assessee; ITA No 2700, 2701, 2702 and 2703/Ahd/2009: (AYs 2004–2005, 2005–2006, 2006–2007 and 2007–2008).

The assessee entered into agreements to sell and development agreements with the societies for consideration. All the responsibilities for carrying out the construction, permission and development of the housing project lie with the assessee. The real owners of the land were only to cooperate with the assessee-developer in carrying out development and also to execute documents whenever required by the assessee as a developer. The real owners have also handed over physical possession of the property in question to the assessee as a builder for carrying out the development project. Thus, the land owners were not left with any rights, title or interest in the development, which was carried out solely by the assessee.

The terms and conditions entered into between the assessee and the societies, as per the development agreements and the agreements to sell, provided all dominant control and rights over the land to the assessee, and the assessee developed and constructed the housing project at its own costs and risks and shall remain the owner of the buildings without any interference from the land owners. The development agreements and agreements to sell do not provide that the assessee would work as a contractor or agent on behalf of the societies. Thus, the assessee has purchased the land in question and has developed the housing project at its own costs within the parameters provided under s 80-IB(10). The CIT(A) was justified in holding that the assessee is entitled for a deduction under s 80-IB(10).

Decided on: 17 June 2011.