Developer status under section 80IB(10) applies to slum rehabilitation projects; works contract exclusion does not bar TDR-linked profit deduction.

Deduction under section 80IB(10) is available to a developer undertaking a housing project at its risk and cost, and is excluded only where the activity is a true works contract. In a slum rehabilitation project, the assessee constructed the project under the SRA scheme, received development rights as consideration, and sold those rights in the open market. On those facts, it was treated as a developer rather than a mere contractor, with beneficial ownership and part performance supporting that status. The works contract exclusion therefore did not apply, and the profit from sale of the TDR qualified for deduction under section 80IB(10).

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Issues: Whether profit earned from sale of transfer of development rights received from the Slum Rehabilitation Authority was eligible for deduction under section 80IB(10) of the Income-tax Act, 1961, and whether the project fell within the works contract exclusion.

Analysis: The deduction under section 80IB(10) is intended for a developer undertaking a housing project and is denied only where the undertaking is in the nature of a works contract. On the facts, the assessee carried out the rehabilitation construction under the SRA scheme, received development rights as consideration, and sold those rights in the open market. The record showed that the assessee functioned as a developer undertaking the project at its risk and cost, and not as a mere contractor executing a predetermined works contract. The project was also treated consistently with the principle that beneficial ownership and possession in part performance can support the status of a developer for the purpose of the deduction.

Conclusion: The works contract exclusion did not apply, and the assessee was entitled to deduction under section 80IB(10) on the profit derived from sale of the TDR.

Ratio Decidendi: Section 80IB(10) allows deduction to a developer undertaking a housing project at its risk and cost, and the exclusion applies only to a true works contract, not to a slum rehabilitation project where development rights are received as consideration.

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