Housing project deduction under section 80IB(10) upheld where the assessee was the real developer, not a mere works contractor.

Deduction under section 80IB(10) remained available where the assessee was the real developer of a housing project, even without ownership of the land. The development agreement showed full authority to develop the project, bearing of investment risk, and entitlement to profit or loss, which meant the activity was not a mere works contract. The broader works contract meanings applied in sales tax and VAT cases under K. Raheja Development Corporation and Larsen and Toubro could not be imported into the Income-tax Act. On those facts, the Explanation excluding works contracts did not apply, and the deduction was allowed.

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Issues: Whether the assessee was entitled to deduction under section 80IB(10) of the Income-tax Act, 1961, or whether the development activity was a works contract falling within the Explanation to section 80IB(10).

Analysis: The development agreement showed that the assessee had full authority to develop the housing project, bore the investment risk, and was entitled to the profit or loss from the project. The earlier decision in Radhe Developers had already held that ownership of land is not a condition precedent for deduction under section 80IB(10) where the assessee is the real developer. The decisions in K. Raheja Development Corporation and Larsen and Toubro were rendered in the context of sales tax and VAT legislation and the wider meaning of works contract adopted there could not be imported into the Income-tax Act. On the facts found by the lower authorities, the assessee was not merely executing a works contract but was developing the housing project at its own risk and cost.

Conclusion: The assessee was entitled to deduction under section 80IB(10), and the Explanation excluding works contracts did not apply.

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