Joint venture

Mahabaleshwara Rao (director) (197 Points)

08 October 2011  

A Land owner has entered into a joint venture contract with a person to convert the revenue land into a resedential sites.  The terms of the agreement is that the owner shall give 40% of the alinated (converted) land to the developer, who has to incur all expenses to convert the revenue land to a resedential sites.   a refundable advance to Rs. 50 lacs is given to the owner. 

what are the tax consequences under Income tax and SErvice tax to both the land owner and the developer.  The developer invests money for development.  Will 60% of the development cost incurred by the develoer will be the sale consideration for 40% of land given by thhe developer.