Law: Income Tax Act, 1961

Section: 80IB

Section 80-IB of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings (Housing projects) - Assessment years 2002-03, 2004-05 & 2005-06 - Assessee engaged in business of building and developing of housing projects, claimed deduction under section 80-IB(10) for profits derived under two projects executed and developed for DDA and IRWO - Assessing Officer denied deduction on ground that assessee-company did not develop and build any housing project of its own but merely executed contract work awarded to it by its principals, i.e., DDA and IRWO - Whether since assessee was awarded both contracts as turnkey projects and conceptualization, overall planning and execution, oversight of entire execution, deployment of personnel at various stages, etc., was with assessee, it could be said that assessee was engaged in development and construction of a housing project - Held, yes - Whether mere circumstance that assessee, after development of infrastructure facility project, transferred same to Govt. and IRWO or DDA paid for development of such housing project did not mean that assessee did not develop residential project, disentitling it to deduction under section 80-IB(10) - Held, yes [Para 15] [In favour of assessee] FACTS â–  The assessee was engaged in the business of building and developing of housing projects. During the years under consideration, it had developed and executed two housing projects for DDA and IRWO. The profits derived from these projects were claimed as tax exempt under section 80-IB(10). â–  The Assessing Officer rejected the assessee's claim holding that the assessee-company did not develop and build any housing project of its own but merely executed the contract work awarded to it by the principals, i.e., DDA and IRWO and there was, consequently, no development of building of housing project of the assessee. â–  The appellate authorities allowed assessee's claim holding that since ownership of the project was not provided as a pre-condition for the claim of deduction under section 80-IB(10), there was no merit in the Assessing Officer's…