Section 80IB(10) deduction for housing project developer upheld despite land standing in another's name

Deduction under section 80IB(10) was stated to depend on an undertaking developing and constructing a housing project, not on ownership of the land. On the facts described, the assessee exercised full control over the project, bore entrepreneurial risk, arranged construction and allied activities, enrolled members, and received the sale proceeds after paying the landowner a fixed consideration, so it was treated as the project developer and not a mere works contractor. The text further notes that possession given in part performance supported limited ownership treatment under section 2(47)(v) read with section 53A, and that the assessee was entitled to the deduction even though the land and project permissions stood in the landowner's name.

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Issues: Whether deduction under section 80IB(10) of the Income-tax Act, 1961 is available to an assessee developing and constructing a housing project when the land stands in the name of another person and development permission is obtained in the landowner's name, and whether such assessee can be treated as merely a works contractor.

Analysis: The deduction provision grants benefit to an undertaking engaged in developing and constructing housing projects and does not, by its language, require ownership of the land as a condition precedent. The agreements showed that the assessee had full control over the project, bore the entrepreneurial risk, arranged construction and allied activities, enrolled members, and appropriated the sale proceeds after satisfying the landowner's fixed consideration. On these facts, the assessee was the developer of the project and not a mere works contractor. The Court also held that, where possession had been given in part performance of the agreement to sell, section 2(47)(v) of the Income-tax Act, 1961 read with section 53A of the Transfer of Property Act, 1882 supported treating the assessee as owner for the limited purpose of the deduction. The later decision relied upon by the Revenue did not warrant departure from the earlier binding view on section 80IB(10).

Conclusion: The assessee was entitled to deduction under section 80IB(10) notwithstanding that the land did not stand in its name and the project documents were in the landowner's name.

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