2012 (5) TMI 568

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....of deletion of deduction made on account of 80IB(10) of the I.T. Act. 2. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) of the I.T. Act, 1961 dated 24/12/2008 were that the assessee-firm is stated to be in the business of development of real estate and construction of residential housing project. It was noted by the Assessing Officer that the profit earned by the assessee at Rs. 25,85,920/- and after claiming the deduction u/s.80-IB of the I.T.Act the NIL return was declared. The Assessing Officer has noted that the land remained with the land owners and the permission for construction was also granted in the name of the land owners as per the following details. "i. 17-05-2005 - the land owner Smt.....

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....t the appellant had acquired the dominance over the land and the land is under the possession of the appellant firm. The appellant firm was the defacto land owner for all practical purposes and had developed the housing project by incurring all the expenses and taking all the risks involved therein. The appellant firm was not merely a contractor of the land owner for fixed remuneration. The land owners were eligible to get only price of land fixed by the development agreements and not to get any share in the development profits of the project The appellant had thus fulfilled all the conditions laid down in sec.80IB(10) of the Act. 3.5. In view of the above discussion in para-3.2 to para-3.4 and respectfully following the decision of the ....

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....facts, the Hon'ble Court has allowed the deduction u/s.80-IB(10). Those requirements have to be fulfilled by a developer to stake a claim of deduction. The requisite information is not available on record. We have noticed that the said requisite information was not even examined by the Revenue Authorities in the light of the High Court decision. The guidelines given by the Hon'ble High Court can be summarized as follows:- (a) The relevant terms of development agreement are to be examined so as to ascertain the terms on which the assessee was granted right of construction of a housing project. (b) On the basis of the terms and conditions, it has to be ascertained whether it was a "work contract" or a "Development Contract". ....