1. Service Tax issues in Joint Ventures & Collaborations in Real Estate Transactions

2. Factors determining Structure
Commercial Considerations
Indirect Taxes
Direct Taxes 2

3. 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

4. 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

5. 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

6. 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

7. Characteristics of a Joint Venture
Joint Ownership
Sharing of Profit & Losses
Active participation in Management
Common purpose
Sharing of risk & rewards 7

8. 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

9. Thanks…..