Housing project deduction under section 80IB(10) allowed despite no land ownership where developer bore project risk

Deduction under section 80IB(10) was held to depend on participation in developing and building an approved housing project, not on ownership of the land or on approvals standing in the developer's own name. Applying the principles in Radhe Developers and Shakti Corporation, the appellate authority noted that the assessee had undertaken the project under a development agreement, bore the commercial risk, and carried full responsibility for execution. On that basis, the assessee was entitled to the deduction and the Revenue's challenge failed.

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Issues: Whether the assessee was entitled to deduction under section 80IB(10) of the Income-tax Act, 1961 despite not being the owner of the land and despite the development permission standing in the name of the land owner or society.

Analysis: The assessee had undertaken a housing project under a development agreement and claimed deduction for the profits derived therefrom. The denial by the Assessing Officer was based on the view that the assessee was only a contractor because the land was not owned by it and the approvals were not in its name. The appellate authority, applying the law laid down in the Gujarat High Court decisions in Radhe Developers and Shakti Corporation, found that the statutory deduction depends on involvement in developing and building an approved housing project and does not require ownership of the land. The decisive factors were that the assessee had undertaken the project, bore the commercial risk, and had full responsibility for development and execution.

Conclusion: The assessee was entitled to deduction under section 80IB(10); the Revenue's challenge failed.

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