Section 80IB(10) deduction upheld where the developer had dominant control; sales tax works contract meaning did not apply.

A housing project developed under an agreement was treated as eligible for deduction under section 80IB(10) because the assessee had taken possession of the land, borne development risk and cost, exercised full construction control, enrolled members, and collected consideration. The court applied Radhe Developers and held that the broader sales tax meaning of "works contract" could not be imported into section 80IB(10) of the Income-tax Act. Supreme Court decisions relied on by the Revenue, being rendered under sales tax and VAT statutes, did not change that position. The activity was therefore not a disqualifying works contract, and the deduction remained available.

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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 arrangement amounted to a works contract so as to attract the statutory exclusion.

Analysis: The housing project was developed under a development agreement by which the assessee had taken possession of the land, borne the cost and risk of development, exercised full authority over construction, enrolled members, and collected consideration. The facts recorded by the lower authorities showed that the assessee had dominant control over the project and that the land had, for income-tax purposes, been treated as transferred in part performance. The decision in Radhe Developers continued to govern the issue, and the broader meaning of 'works contract' applied in sales tax cases could not be imported into section 80IB(10) of the Income-tax Act. The later Supreme Court decisions relied on by the Revenue were rendered in the context of sales tax and VAT statutes and did not alter the position under the Income-tax Act.

Conclusion: The assessee was entitled to deduction under section 80IB(10), and the activity was not treated as a disqualifying works contract.

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