ITO, Bangalore V. M/s Karnataka State C0-Operative Housing Federation Ltd., Bangalore

ITA 1301/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0172 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 30-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: GURUSWAMY ITP
• Keywords: Competent authority
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NOS.1301, 1307 TO 1313(BANG) 2015 (ASSESSMENT YEARS : 2011-12, 2008-09 TO 2014-05) THE INCOME TAX OFFICER, WARD-52)(3), BANGALORE APPELLANT VS M/S KARNATAKA STATE CO-OPERATIVE SUBHADRAMMA HOUSING FEDERATION LTD., NO.3, DEWAN MADHAV RAO ROAD, BANGALORE-560 004 PAN NO.AAAAT0299F RESPONDENT REVENUE BY : DR.P.K.SRIHARI, ADDL. CIT ASSESSEE BY : SHRI GURUSWAMY, ITP DATE OF HEARING : 13-07-2016 DATE OF PRONOUNCEMENT : 2 9-07-2016 O R D E R PER BENCH: ALL THESE APPEALS ARE FILED BY THE REVENUE, OUT OF WHICH ONE APPEAL I.E. NO.1301(B)/2015 IS IN THE COURSE OF ASSESSMENT PROC EEDINGS FOR AY: 2011- 12 AND THE REMAINING SEVEN APPEALS ARE IN COURSE OF PROCEEDINGS U/S 201(1) & 201(1A) OF THE IT ACT, 1961 FOR AY: 2008-09 TO 20 14-15. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP APPEAL OF THE REVENUE IN COUR SE OF ASSESSMENT PROCEEDINGS FOR AY: 2011-12 IN ITA NO.1301(B)/2015. 3. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER; 1. THE ORDER OF THE LD. CIT(A) IS OPPOSED TO LAW A ND FACTS OF THE CASE. ITA NOS.1301 AND 1307 TO 1313(BANG)2015 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A)_ ERRED ALLOWING DEDUCTION U/S 80P(2)(A)(I) O F THE IT ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) ERRED IN ALLOWING DEDUCTION U/S 80P(2)(A)(I) WHEN THE CASE OF THE ASSESSEE GETS COVERED UNDER SECTION 80P (4)?. 4. ON THESE AND ANY OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING, THE HONBLE ITAT IS PLEASED TO QUASH THE ORDER OF CIT(A).. 4. THE LD. DR OF THE REVENUE SUPPORTED THE ASSESSM ENT ORDER. HE ALSO SUBMITTED THAT AS PER THE ASSESSMENT ORDER, CLEAR F INDING HAS BEEN GIVEN BY THE AO THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY BUT NOT PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK AND THEREFORE, THE ASSESSEE IS HIT BY SUB-SEC.4 OF SEC.80P OF THE IT ACT AND HENCE, THE ASSESSEE IS NOT ELIGIB LE FOR DEDUCTION U/S 80P BUT IN SPITE OF THIS, LD. CIT(A) HAD ALLOWED DEDUCTION U/S 80P ON THE BASIS OF SOME JUDICIAL PRONOUNCEMENTS BUT WITHOUT GIVING A F INDING THAT THE ASSESSEE IS NOT HIT BY SUB-SEC.4 OF SEC.80P AND THEREFORE, THE ORDER OF LD. CIT(A) SHOULD BE REVERSED AND THAT OF THE AO SHOULD BE RES TORED. 5. THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A) . 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIN D THAT A CATEGORICAL FINDING HAS BEEN GIVEN BY THE AO THAT THE ASSESSEE IS HIT BY SUB-SEC.4 OF SEC.80P OF THE IT ACT AND ON THIS ACTUAL ASPECT, TH ERE IS NO FINDING BY THE LD. CIT(A) THAT THE ASSESSEE IS NOT HIT BY SUB-SEC.4 OF SEC.80P OF THE IT ACT, 1961 ITA NOS.1301 AND 1307 TO 1313(BANG)2015 3 AND THEREFORE, WITHOUT A FINDING FOR DISLODGING THE OBJECTION OF THE AO REGARDING THE APPLICABILITY OF SUB-SEC.4 OF SEC.80P OF THE IT ACT, 1961, THE ORDER OF THE LD. CIT(A) IS NOT SUSTAINABLE. HOWEVE R, IN THE FACTS OF THE PRESENT CASE, WE FEEL IT PROPER THAT THIS MATTER SHOULD GO BACK TO THE FILE OF THE LD. CIT(A) FOR A FRESH DECISION AFTER GIVING A CLEAR FI NDING ON THE FACTUAL ASPECT AS TO WHETHER SUB-SEC.4 OF SEC.80P IS APPLICABLE TO TH E ASSESSEE IN THE PRESENT CASE OR NOT. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATER BACK TO THE FILE OF THE LD.CIT(A) FOR A F RESH DECISION IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNI TY OF BEING HEARD TO BOTH SIDES. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. 8. NOW, WE TAKE UP REMAINING SEVEN APPEALS OF THE REVENUE WHICH ARE ARISING IN COURSE OF PROCEEDINGS U/S 201(1) AND 201 (1A) OF THE IT ACT, 1961 ARISING OUT OF THE COMBINED ORDER OF THE LD. CIT(A) -13, BANGALORE DATED 20- 08-2015 FOR AY: 2008-09 TO 2014-15 RESPECTIVELY. 9. IN ALL THESE APPEALS, THE ISSUE INVOLVED IS COM MON AND THE GROUNDS RAISED BY THE REVENUE ARE IDENTICAL EXCEPT THE DIFF ERENCE IN AMOUNT AND HENCE, WE RE-PRODUCE GROUNDS RAISED BY THE REVENUE IN AY: 2008-09, IN ITA NO.1307(B)/2015. 1. THE ORDER OF THE CIT(A) IS OPPOSED TO THE FACTS AND NATURE OF THE CASE ON HAND. 2. WHETHER THE LD. CIT(A) WAS RIGHT IN RELYING UP ON THE JUDGMENT OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT & ITO WARD-16(3) VS KARNATAKA STATE JUDICIAL ITA NOS.1301 AND 1307 TO 1313(BANG)2015 4 DEPARTMENT EMPLOYEES HOUSE BUILDING CO-OPERATIVE SO CIETY LTD., WHEN THE FACTS OF THE CASE ARE CLEARLY DISTIN GUISHABLE? 3. WHETHER THE LD. CT(A) WAS CORRECT IN HOLDING TH AT THERE WAS NO ELEMENT OF CONTRACT EVEN THOUGH THE AGREEMENT OF THE ASSESSEE WITH THE DEVELOPER CLEARLY STATES THAT IS FOR PROCUREMENT OF PROJECT LAND AND CARRYING ON WORKS S UCH AS I) CONVERSION OF LAND FROM AGRICULTURAL TO NON-AGR ICULTURAL PURPOSES II) OBTAINING VARIOUS APPROVALS FROM CONCERNED AUT HORITIES, III) FORMING OF LAYOUT BY CARRYING OUT CIVIL WORKS LIKE DRAINAGE, ELECTRICITY ETC., 4. WHETHER THE LD,. CIT(A) WAS RIGHT IN HOLDING T HAT THERE WAS NO ELEMENT OF HANDING OVER OF POSSESSION OF LAND EV EN THOUGH THE FIRST CONDITION ON PAGE-3 OF THE TRIPARTITE AGR EEMENT DATED 31 ST OCTOBER 2006 CLEARLY STATED THAT SRI LAKSHMAN (SEC OND PARTY) AND SRI C.S. SAMBHAIAH, SRI B.S.SHANTHA KUMA R AND SRI B.M.SHIALINGEGOWDA (TOGETHER KNOWN AS THIRD PAR TY) HAD PUT THE KARNATAKA STATE CO-OPERATIVE HOUSING FEDERA TION LT.,(FIRST PARTY) IN POSSESSION OF THE CONVERTED LA ND MEASURING 26 ACRES 6 GUNTAS AS DESCRIBED IN THE SCHEDULE? 5. WHETHER THE LD. CIT(A) WAS CORRECT IN IGNORING THE CLAUSE-5 OF THE SUPPLEMENTAL AGREEMENT DATED 12/03/2008 WHIC H CLEARLY STATES THAT THE RELEASE OF PAYMENT TO THE D EVELOPER IS ON COMPLETION OF CONTRACT BASIS AND WHICH IS SUBSEQ UENT TO THE TRIPARTITE AGREEMENT DATED 31 ST OCTOBER 2006 IN WHICH IT IS STATED THAT THE POSSESSION OF CONVERTED LANDS WAS WITH KARNATAKA STATE CO-OPERATIVE HOUSING FEDERATION LIM ITED?. 6. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, IT IS P RAYED THAT EVEN IF IT IS HELD THAT THERE IS NO ELEMENT OF CONT RACT FOR PROCUREMENT OF LAND WHETHER THERE IS NO ELEMENT OF CONTRACT FOR DEVELOPMENTAL WORKS ALSO, ESPECIALLY WHEN THE ITA NOS.1301 AND 1307 TO 1313(BANG)2015 5 SUPPLEMENTAL AGREEMENT ENVISAGES THE RELEASE OF PAY MENT ON A MILESTONE BASIS WHICH IS TYPICAL OF CONTRACTS ? . 10. THE LD. DR OF THE REVENUE SUPPORTED THE ORDER O F AO PASSED BY HIM U/S 201(1) & 201(1A) OF THE IT ACT, 1961. AS AGAIN ST THIS, LD AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A). HE A LSO SUBMITTED THAT THIS ISSUE IN THE PRESENT CASE IS SQUARELY COVERED IN FA VOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER RENDERED IN THE CASE OF DCIT VS ACCO UNTANT GENERAL OFFICE CO- OPERATIVE SOCIETY LTD. IN ITA NO. 299 TO 300/BANG/2 005 AND 768 TO 771/BANG/2009 DATED 28.08.2009 AND ALSO BY THE JUDG MENTS OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT V S M/S KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO-OPE RATIVE SOCIETY IN ITA NO. 1260/2006 & 1275/20016 BOTH DATED 10.03.2010 WH EREIN IT WAS HELD BY THE HONBLE KARNATAKA HIGH COURT THAT THE ASSESSEE IS ONLY A PURCHASER AND HENCE, EVEN IF ANY ADVANCE SALE CONSIDERATION IS PA ID BY THE ASSESSEE, NO TDS IS REQUIRED TO BE DEDUCTED. NOW IN THE LIGHT OF THESE JUDGMENTS, WE EXAMINE THE FACTS OF THE PRESENT CASE. IN THE PRESENT CAS E, AS PER AGREEMENT AVAILABLE IN PAPER BOOK, THE FIRST PARTY I.E. THE ASSESSEE SO CIETY AGREED TO PURCHASE 1500 INTERMITTENT SITES OF VARIOUS DIMENSIONS IN TH E PROPOSED LAYOUT TO BE FORMED BY SECOND PARTY I.E. SHRI LAKSHMAN AT THE R ATE OF 305/- PER SQ.FT. AND THE FIRST PARTY HAS AGREED TO MAKE AN ADVANCE PAYME NT OF RS.2.00 CRORES TO THE SECOND PARTY AND FURTHER PAYMENT WAS TO BE MADE IN INSTALLMENTS. THIS IS TRUE THAT THE LAND WAS NOT OWNED BY THE SECOND P ARTY AT THE TIME OF AGREEMENT AND IT WAS SPECIFIED IN THE AGREEMENT THA T THE SECOND PARTY WAS ITA NOS.1301 AND 1307 TO 1313(BANG)2015 6 REQUIRED TO ACQUIRE THE REQUIRED LAND AND SECURE EI THER THE CONVERTED LAND AND SECURE THE APPROVAL OF THE COMPETENT AUTHORITY FOR USE OF LAND FOR NON- AGRICULTURAL PURPOSES AND RESIDENTIAL USE AND ALSO TO OBTAIN APPROVAL FOR THE LAYOUT PLAN FROM THE COMPETENT SANCTIONING AUTHORIT Y AND THE SECOND PARTY WAS ALSO REQUIRED TO PROVIDE CERTAIN SPECIFIED FACI LITIES AND AMENITIES IN THE LAYOUT SUCH AS WIDE ASPHALTED ROADS, WATER AND SANI TARY CONNECTIONS, ELECTRIFICATION WITH OVERHEAD LINES AND TRANSFORMER S, ADEQUATE STREET LIGHTS, DEDICATED TELEPHONE EXCHANGE, MILK BOOTHS, KPTCL/BE SCOM EXTENSION COUNTER, POLICE OUTPOST, BUS TERMINUS, SHOPPING ARC ADES INCLUDING VEGETABLE MARKET ETC., ALONG WITH OVERHEAD TANK/SUMP TANK CON NECTED TO BORE WELLS IN ORDER TO PROVIDE ADEQUATE WATER SUPPLY AND ROADSIDE TREE PLANTATION WITH TREE GUARDS ETC. BUT THIS IS ALSO TRUE THAT THE AGREEMEN T IS FOR PURCHASE AND SALE OF LAND WITH SPECIFIC FACILITIES AND IT CANNOT BE SAID THAT THIS IS WORKS CONTRACT. FOR EXAMPLE, IF A PERSON A AGREES WITH DIFFERENT PE RSON SAY B TO SELL AND SUPPLY CERTAIN QUANTITY OF SPECIFIC QUALITY OF MATE RIAL AT A PREDETERMINED PRICE, IT CANNOT BE SAID THAT SUCH AGREEMENT IS FOR CARRYING OUT A CONTRACT AND NOT A CONTRACT OF PURCHASE AND SALE SIMPLY BECAUSE THE ITEM TO BE SUPPLIED IS TO BE CONFORMING TO CERTAIN SPECIFIED QUALITY AND O THER CONDITIONS. HENCE, IN OUR CONSIDERED OPINION, IN THE PRESENT CASE, THE AG REEMENT OF THE ASSESSEE WITH SHRI LAKSHMAN IS FOR PURCHASE OF LAND WITH SOM E SPECIFIC FACILITIES AND IT IS NOT A CONTRACT REQUIRING DEDUCTION OF TDS U/S 19 4C OF THE IT ACT, 1961. THIS VIEW OF US IS IN LINE WITH JUDGMENT OF THE HON BLE KARNATAKA HIGH COURT ON WHICH RELIANCE HAS BEEN PLACED BY THE ASSESSEE A ND THEREFORE, BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT, WE ITA NOS.1301 AND 1307 TO 1313(BANG)2015 7 DECLINE TO INTERFERE WITH THE ORDER OF THE LD.CIT(A ) ON THIS ISSUE IN ANY OF THESE YEARS. 11. IN THE RESULT, ALL THESE SEVEN APPEALS OF THE REVENUE IN COURSE OF PROCEEDINGS U/S 201(1)( 201(1A) OF THE IT ACT ARE D ISMISSED. 12. IN THE COMBINED RESULT, ONE APPEAL OF THE REVE NUE IN COURSE OF ASSESSMENT PROCEEDINGS IS ALLOWED FOR STATISTICAL P URPOSES AND ALL THE REMAINING SEVEN APPEALS OF THE REVENUE ARE DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. (ASHA VIJAYARAGHAVAN) (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER BANGALORE: D A T E D : 29-07-2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR, ITAT, BANGALORE ITA NOS.1301 AND 1307 TO 1313(BANG)2015 8 1. DATE OF DICTATION .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER C OMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SECTION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER