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					   Service Tax issues in Joint
Ventures & Collaborations in Real
      Estate Transactions
Factors determining Structure

Commercial Considerations


Indirect Taxes


Direct Taxes




           2
Reasons For Joint Venture & Collaboration

  Restriction on ownership of Land – Agricultural Land

  Limited resources of Land owner to develop

  Development costs are high

  Developer has resources & technical expertise to
   develop




                       3
  Types of Agreement
 Joint Venture Agreements
 Development Agreements
 Collaboration Agreements

  Objective of Such Agreements
 Land owner provides land
 Builder undertakes development/ construction
 Land owner & builder share developed areas typically
  known as – “Owner’s area” and “Developer’s Area”
 Also share proportionate undivided land

                     4
Case Study
    Facts
   Owner Contributes Land
   Developer contributes funds, technical knowledge and execution skills
   Share developed area including corresponding undivided share in Land
   Developer in additional pays additional lump sump amount to land owner
   No direct contract for construction
   Land owner also has certain obligations
     • Owner would execute all documents for transfer of land
     • Owner not to obstruct construction
     • Owner to keep land free from all encumbrances
     • Owner to Apply for completion Certificate
     • Owner to make application to Civil Authority
     • Owner to seek environment clearance
     • Owner to get CLU done


                            5
  Contention of Developer

 Not a contract for construction

 Contract for mutual benefit

 Contract not for providing services

 Co-Adventurer with Land Owner in a Joint Venture




                       6
 Characteristics of a Joint Venture
 Joint Ownership

 Sharing of Profit & Losses

 Active participation in Management

 Common purpose

 Sharing of risk & rewards




                    7
    Effect of a Joint Venture
   There is no relationship of service provider and service
    receiver

   Hence, No Service Tax

   Such Joint Venture are rare

   More Hybrids Agreements




                       8
Thanks…..

				
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posted:9/14/2012
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