The ITO, Ward-9(1), Ahmedabad V. M/s. Radhe Associates, Ahmedabad

ITA 1124/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1081 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 20-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: P M MEHTA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.1124/AHD/2013 / ASSTT. YEAR: 2009-2010 ITO, WARD - 9(1) AHMEDABAD. VS M/S.RADHE ASSOCIATES 1 ST FLOOR, CHINUBHAI CHAMBERS B/H. CITY GOLD CINEMA ASHRAM ROAD, AHMEDABAD. PAN : AACFR 3620 H ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI DINESH SINGH, SR.DR ASSESSEE BY : SHRI P.M. MEHTA, AR / DATE OF HEARING : 20/06/2016 / DATE OF PRONOUNCEMENT: 18/07/2016 $%/ O R D E R THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINS T THE ORDER OF THE LD.CIT(A)-I, AHMEDABAD DATED 15.1.2013 PASSED FOR T HE ASSTT.YEAR 2009-10. 2. THE GROUNDS TAKEN BY THE REVENUE ARE NOT IN CONS ONANCE WITH THE RULE 8 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 196 3 - THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF, SOLE GRIEVA NCE OF THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.43,75,750/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ELECTRONICALLY ON 03.9.2010 DECLARING TOTAL INCOME AT NIL. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE T OOK A PROJECT VIZ. GANESH PLAZA FROM HIMALAYANAGAR COOPERATIVE HSG. SOCIETY LTD. THIS SCHEME WAS DEVELOPED BY THE ASSESSEE DURING THE FINANCIAL YEAR 1993-94 TO 2004-05. ACCORDING TO THE ASSESSEE, AS PER THE DEVELOPMENT A GREEMENT, THE ASSESSEE ITA NO.1124/AHD/2013 2 WAS AUTHORIZED TO ENTERTAIN BOOKING FROM THE NEW ME MBERS. IT HAS RECEIVED BOOKING AMOUNT FROM NEW MEMBERS. THE ASSESSEE HAS TO REMIT THAT AMOUNT TO THE SOCIETY AND ITS CLAIM WAS RESTRICTED TO THE COST OF CONSTRUCTION AGREED BETWEEN THE ASSESSEE AND THE SOCIETY AT THE RATE OF RS.3000/- PER SQ.YARD. THUS, THE ASSESSEE HAS RECEIVED CONTRIBUTION FROM F IVE NEW MEMBERS WHICH HAS BEEN REMITTED TO THE SOCIETY. THE AO TREATED T HIS AS UNACCOUNTED RECEIPT OF THE ASSESSEE FROM THE PROJECT. ACCORDINGLY, HE MADE THE IMPUGNED ADDITION. 4. ON APPEAL, THE LD.CIT(A) HAS DELETED THE ADDITIO N BY RECORDING THE FOLLOWING FINDING: 5. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SU BMISSIONS OF THE A..R. OF THE APPELLANT CAREFULLY. IT IS SEEN THAT T HE FACT THAT THE ASSESSEE IS A CONTRACTOR AND DEVELOPER FOR THE SCHEME HIMALA YANAGAR COOPERATIVE HOUSING SOCIETY LTD. HAS NOT BEEN DOUBT ED BY THE ASSESSING OFFICER. THE APPELLANT HAS RECEIVED THE F OLLOWING AMOUNT FROM THE PROSPECTIVE BUYERS DURING THE YEAR: SR. NO. PARTY FROM WHOM SUM RECEIVED PROPERTY FOR WHICH SUM RECEIVED SUM RECEIVED (RS.) 1. SHRI PRAFUL C. PATEL, HUF OFFICE NO. B-810 8,00,000/- 2. SHRI ASHISH P. PATEL, HUF UNITNO.807 6,40,000/- 3. SHRI ASHISH P. PATEL, HUF UNITNO.705 4,37,250/- 4. NILU INVESTMENT PVT. LTD. OFFICE NO.407 9,20,500/- 5. SHRI VASANTLAL L. SHAH OFFICE NO.B-707 15,78,000/- TOTAL 43,75,750/- ITA NO.1124/AHD/2013 3 THE COPY OF THE CONSTRUCTION AGREEMENT BETWEEN HIMA LAYANAGAR COOPERATIVE HOUSING SOCIETY LTD. AND THE APPELLANT CLEARLY STATES THAT THE LAND BELONGS TO HIMALAYANAGAR COOPERATIVE HOUSI NG SOCIETY LTD. AND THAT THE APPELLANT IS TO BE PAID @ RS.3,000/- P ER SQ.YARD TOWARDS CONSTRUCTION COST. IT IS ONLY AN ARRANGEMENT FOR PA YMENT OF THE FUNDS THAT THE SOCIETY HAS ALLOWED THE APPELLANT TO COLLE CT MONEY FROM THE MEMBERS AND TRANSFER THE SAME TO THE SOCIETY. AS PE R CLAUSE-4 OF THE AGREEMENT, THE APPELLANT IS ENTITLED TO COLLECT THE AGREED CONSIDERATION FROM THE PROSPECTIVE MEMBERS AS PER INSTRUCTION OF THE SOCIETY. THE APPELLANT IS ONLY ENTITLED TO CLAIM THE CONSTRUCTIO N COST @ RS.3,000/- PER SQUARE YARD FROM THE SOCIETY TOWARDS COST OF TR ANSACTION THE HOUSES AS PER CLAUSE 1 OF THE AGREEMENT. THE AGREEMENT CLE ARLY STATES WHAT ARE THE FACILITIES TO BE PROVIDED BY THE CONTRACTOR WHICH IS INCLUDED IN THIS COST OF RS.3,000/- AND WHAT FACILITIES ARE NOT INCLUDED IN THE SAID AMOUNT OF RS.3,000/-. IT HAS ALSO BEEN SPECIFIED TH AT THE CONTRACTOR MAY PURCHASE THE MATERIAL IN THE NAME OF CO-OPERATIVE S OCIETY. 5.1 IN THE INSTANT CASE, THE CONTRACTOR HAS COMPLET ED HIS CONSTRUCTION ACTIVITY DURING THE PERIOD RELEVANT TO A.Y.I995-96 TO A.Y.2005-06. THE APPELLANT HAS BEEN CONTINUOUSLY SHOWING THE PROFIT ON THE CONTRACT IN THESE YEARS. MERELY BECAUSE CERTAIN FLATS ARE ALLOT TED BY THE SOCIETY A LATER DATE WILL NOT RESULT IN PROFIT OF THE APPELLA NT IN THE LATER YEARS. THE COLLECTION OF THE MONEY FROM THE PROSPECTIVE MEMBER S (BUYERS) DOES NOT CONSTITUTE ANY INCOME OF THE APPELLANT. THE APP ELLANT HAS A RUNNING ACCOUNT WITH THE SOCIETY WHEREIN IT RECEIVES ENTIRE AGREED CONSIDERATION FROM THE CLIENTS AND THEREAFTER, REMITS THE SAME TO THE SOCIETY AFTER DEDUCTING THE AMOUNT RECEIVABLE TOWARDS CONSTRUCTIO N COST DUE. WHAT THE APPELLANT IS ENTITLED TO RETAIN IS ONLY A SUM O F RS.3,000/- PER SQUARE YARD TOWARDS CONSTRUCTION COST. THE ASSESSING OFFIC ER HAS NOT BROUGHT ANYTHING ON RECORD TO PROVE THAT THE APPELLANT WAS INFACT THE OWNER OF THE FLATS. THE MONEY COLLECTED BY THE APPELLANT FRO M THE PROSPECTIVE BUYERS THUS CANNOT BE INCOME OF THE APPELLANT. THE ASSESSING OFFICER'S OBSERVATION THAT THOUGH THE APPELLANT WAS IN RECEIP T OF MONEY FROM NILU INVESTMENTS AND SHRI VASANTLAL SHETH WAS TO BE SHOWN AS ADVANCE BOOKING BUT WAS NOT FOUND RECORDED UNDER ANY LOAN H EAD IN THE BALANCE-SHEET OF THE ASSESSEE FOR A.Y.2009-10 IS NO T CORRECT. THE MONEY COLLECTED FROM THE FOLLOWING PERSONS TOTALING TO RS .43,75,750/- WOULD HAVE TO BE CREDITED TO THE ACCOUNT OF THE CO-OPERAT IVE SOCIETY BECAUSE THE APPELLANT WOULD HAVE TO REMIT THIS AMOUNT TO TH E SOCIETY. ITA NO.1124/AHD/2013 4 5.2 AS FAR AS THE CONCEALED INCOME OF THE APPELLANT IS CONCERNED SINCE THE APPELLANT WAS ONLY A CONTRACTOR DOING CONTRACT WORK HENCE NO INCOME HAS ACCRUED TO THE APPELLANT AFTER THE COMPL ETION OF THE CONTRACT. THE ASSESSING OFFICER WAS NOT BROUGHT ANY THING ON RECORD TO SHOW THAT THE APPELLANT WAS THE OWNER OF THE HOUSES OR THAT THE APPELLANT WAS ENTITLED TO RECEIVE PART OF THE SALE CONSIDERATION OVER AND ABOVE THE AGREED RATE OF RS.3,000/- PER SQUARE YARD . IT IS ALSO NOT THE CASE OF THE ASSESSING OFFICER THAT SOME AMOUNT WAS PENDING IN RESPECT OF THE WORK ALREADY DONE BY THE APPELLANT. THE CONT ENTION OF A.R. OF THE APPELLANT THAT THE PROJECT COMPLETED IN A.Y.2005-06 AND HENCE NO FURTHER INCOME CAN ACCRUE TO THE APPELLANT IS CORRE CT. THE MONEY COLLECTED FROM THE PROSPECTIVE BUYERS IS AS PER THE AGREEMENT AND THE SAME HAS TO BE REMITTED BACK TO THE SOCIETY. THE SO CIETY MAY HAVE A RUNNING ACCOUNT WITH THE APPELLANT AND THE APPELLAN T MAY BE COLLECTING MONEY ON BEHALF OF THE SOCIETY, BUT SUCH COLLECTION OF MONEY WOULD NOT MAKE IT THE INCOME OF THE APPELLANT. IN VIEW OF THE FACT THAT THE APPELLANT COULD NOT COLLECT ANYTHING MORE THAN RS.3 ,000/- PER SQUARE YARD TOWARDS CONSTRUCTION COST. THE ADDITION MADE B Y THE ASSESSING OFFICER ON RECEIPT OF MONEY FROM PROSPECTIVE CLIENT S CANNOT BE TREATED AS INCOME OF THE APPELLANT. IN VIEW OF THE ABOVE, T HE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. THE SAME IS HENCE DELETED. 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. THE CASE OF THE ASSESSEE IS THAT AS PER THE TERMS OF AGREEMENT ENTERED WITH THE SOCIETY, IT WAS REQUIRED TO ENROLL NEW MEMBERS AND RECEIVED BOOKING AMOUNTS FROM THEM. THE ASSESS EE WAS TO RECEIVE RS.3,000/- PER SQ.YARD FROM THE SOCIETY. WHATEVER AMOUNT IT WILL COLLECT FROM THE ALLEGED NEW MEMBERS, THAT WILL GO TO THE SOCIET Y. THE LD.FIRST APPELLATE AUTHORITY HAS CONSIDERED THIS ASPECT WHILE DELETING THE ADDITION. ACCORDING TO THE LD.FIRST APPELLATE AUTHORITY, THE ASSESSEE A S DEMONSTRATED THAT IT HAS RUNNING ACCOUNT WITH THE SOCIETY, WHEREIN IT RECEIV ES ENTIRE AGREED CONSIDERATION FROM THE CLIENTS, AND THEREAFTER, REM IT THE SAME TO THE SOCIETY AFTER DEDUCTING THE AMOUNT RECEIVABLE TOWARDS CONST RUCTION COST DUE. THERE IS NO ELEMENT OF UNACCOUNTED RECEIPTS PERTAINING TO TH E ASSESSEE IS INVOLVED. THEREFORE, IN MY OPINION, THE LD.FIRST APPELLATE AU THORITY HAS APPRECIATED THE ITA NO.1124/AHD/2013 5 FACTS IN RIGHT PERSPECTIVE, AND NO ADDITION REQUIRE S TO BE MADE. WITH THE ABOVE OBSERVATIONS, I DISMISS THE APPEAL OF THE REV ENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 18 TH JULY, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 18/07/2016