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2014 (12) TMI 483 - GUJARAT HIGH COURTAllowability of deduction u/s 80IB(10) - land development agreement - Decision in the case of DY. COMMISSIONER OF INCOME TAX Versus RADHE DEVELOPERS INDIA LTD [2009 (4) TMI 21 - GUJARAT HIGH COURT] rightly followed or not – Held that:- The Tribunal has rightly recorded that CIT(A) found that as per the Development Agreement and facts of the case, the assessee had taken full responsibility for execution of the development project - The assessee had been given full authority for execution of the development project, including development of the land and construction of residential units - The assessee had engaged professionals such as architect for designing architectural work and had also enrolled members and collected the consideration from the buyers of the residential units - The assessee had also paid the cost of the land to the Societies including stamp duty and had taken possession of the land for construction of the project – as per the decision in DY. COMMISSIONER OF INCOME TAX Versus RADHE DEVELOPERS INDIA LTD [2009 (4) TMI 21 - GUJARAT HIGH COURT] a legal title was not required for getting benefits u/s 80IB(10) of the Act and the assessee was the deemed owner of the land u/s 2(47) of the Act - the assessee had borne the entire cost of construction, including materials, and the receipt was not fixed for the contractor and the assessee was a developer and builder of the housing project. In K. Raheja Development Corporation v. State of Karnataka [2014 (10) TMI 110 - KARNATAKA HIGH COURT] while construing the meaning of the term "works contract", what the Supreme Court had in mind was Article 366(29-A)(b) of the Constitution. By Article 366(29-A)(b), a legal fiction had been introduced into a contract which was divisible into one for sale of goods and the other for supply of labour - the term "works contract" has to be understood in a manner that Parliament had in its view at the time of the Forty-sixth Amendment which was more than appropriate to Article 366(29-A)(b) and which was not restricted to "works contract" as commonly understood i.e. a contract to do some work on behalf of somebody else. The ordinary meaning of the term "works contract" means a contract to do some work on behalf of somebody else whereas in the above decisions, the Supreme Court having regard to the provisions of Article 366(29-A)(b) has adopted a wider meaning of the expression "works contract". In the opinion of this court, while construing the provisions of the Income Tax Act, the ordinary meaning of the expression "works contract" is required to be taken into and resort cannot be had to the meaning of the said expression as envisaged under the relevant Sales Tax Act which are in the context of the provisions of Article 366(29-A)(b) of the Constitution - the interpretation rendered was based not on the normal meaning of the term "works contract" but on the special meaning assigned to it under the Act itself, which provided for a definition of inclusive nature - the Tribunal did not commit any error in holding that the assessees were entitled to the benefit u/s 80IB of the Act even where the title of the lands had not passed on the assessees and under some cases the development permissions also have been obtained in the name of the original owners – thus, the order of the Tribunal is upheld – Decided against revenue.
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