The ACIT, Circle-5, Baroda V. Hindustan Earth Movers Pvt.Ltd., Baroda

ITA 1379/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89277 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 13-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: P M MEHTA ARS; S N SOPARKAR
• Keywords: Business income; Assessment record

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD 00 , ! ' #$, % & BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ ITA NO.1379/AHD/2011 WITH CO NO.116/AHD/2011 % ) *)/ ASSESSMENT YEAR: 2007-08 A SSTT. COMMISSIONER OF INCOME TAX, CIRCLE-5, BARODA. VS M/S HINDUSTAN EARTH MOVERS PVT. LTD., 1, ASHWAMEGH, SAMRAJYA COMPLEX, MUNJMAHUDA ROAD, BARODA. PAN : AAACH 8593 A +, / (APPELLANT) -. +, / (RESPONDENT) REVENUE BY : SHRI M.K. SINGH, SR. D.R. ASSESSEE(S) BY: SHRI S.N. SOPARKAR & SHRI P.M. MEHTA, A.RS. / DATE OF HEARING : 08/04/2015 / DATE OF PRONOUNCEMENT: 29/04/2015 // O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS O BJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSION ER OF INCOME-TAX (APPEALS)-V, BARODA DATED 14.03.2011. 2. THE GROUND OF APPEAL OF THE REVENUE IS THAT THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.72,44,000/- MADE ON ACC OUNT OF PROFIT ON SALE OF PLOT OF LAND. ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 2 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. REQUIRED THE ASSESS EE TO PRODUCE SALE DEEDS OF ALL PROPERTIES SOLD DURING THE YEAR. THE ASSESSEE SUBMITTED THE DETAILS OF PROPERTIES SOLD IN THE YEAR. THE A. O. OBSERVED THAT THE ASSESSEE ALONG WITH CONFIRMING PARTY, TIRUPATI CORP ORATION SOLD A PLOT IN RS NO.33 TO TIRUPATI PRIME ESTATE PVT. LTD. AND AS PER SALE DEED AT PAGE NO.14, THE PURCHASER HAD PAID CONSIDERATION OF RS.4 6,08,000/- BY CHEQUE NO.999484 DATED 09.05.2006 AND RS.72,00,000/ - BY CHEQUE NO.992482 DATED 09.05.2006 TOWARDS PURCHASE OF FSI. THE ASSESSEE HAS DISCLOSED ONLY RS.45,64,000/-. THEREFORE, THE DIFFERENCE OF RS.72,44,000/- (RS.72,00,000 + 46,08,000 RS.45,64 ,000) WAS ADDED BY THE A.O. 4. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMIT TED THAT ANOTHER GROUP CONCERN M/S. ADITI CONSTRUCTION HAD RECEIVED RS.1,60,00,000/- FROM M/S. SHREE TIRUPATI CORPORATION FOR SALE OF LA ND AS PER DECREE OF COURT AS UNDER :- NAME AMOUNT (RS.) REMARKS HEMPL 4564000 OFFERED TO TAX IN THE CASE OF HEMPL M/S ADITI CONSTRUCTION 11436000 OFFERED TO TAX IN THE CASE OF ADITI CONSTRUCTION. 5. IT WAS FURTHER SUBMITTED THAT PAYMENTS OF RS.46, 08,000/- AND RS.72,00,000/- BY M/S. TRUPATI CORPORATION HAVE NOT BEEN RECEIVED BY THE ASSESSEE AND THE ASSESSEE HAS NOTHING TO DO WIT H THESE PAYMENTS AND, THEREFORE, THE A.O. HAS NO JURISDICTION FOR MA KING THE ADDITION. THE ASSESSEE ALSO SUBMITTED COPY OF DEVELOPMENT AGR EEMENT DATED 18.07.2005 OF TRANSFERRING DEVELOPING RIGHTS OF PLO T NO. 1 & 5 TO TIRUPATI CORPORATION AND ALSO THE ORDER OF THE COURT DATED 1 7.10.2006 REGARDING THE UNDERSTANDING BETWEEN M/S ADITI CONSTRUCTION AN D HINDUSTAN EARTH MOVERS PVT. LTD. ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 3 6. IN THE REMAND REPORT THE A.O. REITERATED HIS EAR LIER STAND. IT WAS ALSO STATED THAT AS PER M.O.U. DATED 27.01.1997 M/S ADITI CONSTRUCTION WAS SUPPOSED TO PURCHASE LAND RS NO. 33 & 34 PLOT N OS. 1, 2, 3 & 5 FROM HINDUSTAN EARTH MOVERS PVT. LTD. BUT IT EXPRES SED ITS INABILITY TO PAY THE SALE CONSIDERATION AND THEREAFTER AS PER RE VISED MOU HINDUSTAN EARTH MOVERS PVT. LTD. WAS SUPPOSED TO SELL PLOT NO S. 1, 2 & 5 AND SALE PROCEEDS WERE TO BE DISTRIBUTED IN THE RATIO OF 2/3 RD TO ADITI CONSTRUCTION AND 1/3 RD TO HINDUSTAN EARTH MOVERS PVT. LTD. THE A.O. ADDE D THE SALE DEEDS REFERRED TO SURVEY NO.33/P AND NOT 33 & 34 AN D THERE IS NO REFERENCE OF PLOT NO.33 IN THE SALE DEED AND THAT I N THE SALE DEED THERE IS NO MENTION OF APPORTIONMENT OF RECEIPTS. 7. IN RESPONSE TO THE REMAND REPORT, IT WAS SUBMITT ED THAT THE DEVELOPMENT RIGHT FOR PLOT NOS.1 & 5 WERE SOLD TO T IRUPATI CORPORATION FOR RS.1.60 CRORES AND IN VIEW OF THE COURTS DECIS ION, THE SHARE OF HINDUSTAN EARTH MOVERS PVT. LTD. WAS RS.45,64,000/- WHICH WAS REFLECTED IN ITS BOOKS. IT WAS SUBMITTED THAT IN P ARA NO.3 OF THE DEVELOPMENT AGREEMENT BETWEEN TIRUPATI CORPORATION AND HINDUSTAN EARTH MOVERS PVT. LTD. IT WAS STATED AS UNDER :- WHEREAS BY VIRTUE OF THIS DEVELOPMENT AGREEMENT, T HE PARTY OF THE FIRST PART HEREBY GIVING THE AUTHORITY TO THE PARTY OF THE SECOND PART TO MOVE THE SIGN BOARD OVER THIS LA ND AND THEY ARE ALSO AUTHORIZED TO BOOK THE MEMBERS IN THE FIR M NAME, I.E. IN M/S SHRI TIRUPATI CORPORATION. AND THEY ARE ALS O AUTHORIZED TO COLLECT THE COLLECTION/MONEY OF ANY AMOUNT TOWARDS THE COST OF THE LAND AND F.S.I. OF THE LAND TOWARDS CONSTRUCTIO N. WHICH WILL BE CARRIED OUT TOWARDS THE LAND WHICH IS OWNED BY T HE PARTY OF THE FIRST PART. 8. THEREFORE, IT WAS SUBMITTED THAT HINDUSTAN EARTH MOVERS PVT. LTD. WAS MERELY A CONFIRMING PARTY IN REGARD TO AGREEMEN TS FOR SALE OF FSI AND NOT RECEIVED ANY AMOUNT ON THE SAID TRANSACTION S. IT WAS ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 4 SUBMITTED THAT TIRUPATI CONSTRUCTION SOLD THE FSI T O M/S. TIRUPATI PRIME ESTATE PVT. LTD. AND THAT BOTH THE PAYMENTS OF RS.7 2 LAKHS AND RS.46,08,000/- WERE RECEIVED BY TIRUPATI CORPORATIO N AND THESE FACTS ARE VERIFIABLE FROM THE COPY OF BANK ACCOUNT OF TIR UPATI PRIME ESTATE LTD. AND THE SALES ACCOUNT OF TIRUPATI CORPORATION AND THE ACCOUNT OF TIRUPATI PRIME ESTATE IN THE BOOKS OF TIRUPATI CORP ORATION. IT WAS, THEREFORE, PLEADED THAT THE ADDITION SHOULD BE DELE TED. 9. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS, H ELD AS UNDER :- 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE APPELLANT AND THE REMAND REPORT. I HAVE ALSO CALLED FOR THE ASSESSME NT RECORDS AND EXAMINED THEM. THE CONTENTIONS AND THE RESPONSE OF THE APPELLANT WAS DISCUSSED WITH THE AO WHO WAS ALSO PR ESENT AND THE SUBMISSIONS OF THE APPELLANT WERE VERIFIED FROM THE ASSESSMENT RECORDS. FROM PERUSAL OF THE SALE DEEDS AND OTHER DOCUMENTS, IT APPEARS THAT AO SEEMS TO HAVE MIXED U P THE FACTS IN THE ASSESSMENT ORDER. THE DEVELOPMENT AGREEMENT DT. 18.07.05 BETWEEN HEMPL & M/S SHREE TIRUPATI CORPORA TION STIPULATES THAT LAND AREA MEASURING 4548.3 SQ. METE R IN R.S. NO.33 PLOT NO.1 & 5 AT VILLAGE: AKOTA, AKOTA MUJMAH UDA ROAD HAS BEEN SOLD BY HEMPL TO M/S TIRUPATI CORPORATION FOR RS.1,60,00,000/- AND THAT THE SELLER WAS TO RECEIVE RS.32 LAKHS DURING MARCH 05 TO JUNE 05 AND THE BALANCE RS.1,2 8,00,000/- WAS TO BE RECOVERED FROM CUSTOMERS TOWARDS UNITS BO OKED BY THEM AND THAT HEMPL WILL HAVE FULL LIEN OVER THE CO NSTRUCTION CARRIED OUT BY M/S TIRUPATI CORPORATION TILL THE AB OVE PAYMENT IS COMPLETED. FURTHER AS PER OUT OF COURT SETTLEMENT DT. 17.10.06 M/S ADITI CONSTRUCTION IS TO RECEIVE 2/3 RD AND HEMPL 1/3 RD OF THE PAYMENTS FOR SALE OF PLOT NO.1 AND 5. HEMPL RECEIV ED RS.4564000/- FOR SALE OF DEVELOPMENT RIGHT AND M/S ADITI CONSTRUCTION RECEIVED RS.11436000/- AND THE RECEIPT S WERE OFFERED FOR TAXATION IN THE RETURN FOR AY 07-08. I T IS A FACT THAT AS PER PARA 3 OF THE DEVELOPMENT AGREEMENT DT. 18.07.0 5, HEMPL HAS TRANSFERRED THE DEVELOPMENTAL RIGHT AS WELL S T HE FSI FOR TOTAL PRICE OF RS.1.6 CRORES. 4.3.1 BY SALE-DEED DT. 16.5.06, HEMPL (MENTIONED A S SELLER) AND SHRI TIRUPATI CORPORATION (MENTIONED AS PARTY OF THE SECOND PART AND DEVELOPER AND CONFIRMING PARTY) SOL D FSI RIGHTS IN RESPECT OF OFFICE NO.105-106, 205-206, 305-306 & 40 5-406 TO ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 5 TIRUPATI PRIME ESTATE P. LTD. FOR RS.4608000/- AND AT PAGE NO.14 OF THE SAID AGREEMENT THE PURCHASER HAS PAID TO THE SELLER RS.46,08,000/- VIDE CHEQUES NO.99484 DT. 9.5.06 DRA WN ON CANARA BANK, ALKAPURI FOR PURCHASE OF FSI AND THE S ELLER ALSO ACKNOWLEDGED THE RECEIPTS AS PER PAGE-15 OF THE AGR EEMENT. SIMILARLY VIDE SALE-DEED DT. 16.5.06, HEMPL (MENTIO NED AS SELLER) AND SHRI TIRUPATI CORPORATION (MENTIONED AS PARTY O F THE SECOND PART AND DEVELOPER AND CONFIRMING PARTY) SOLD FSI R IGHTS OF SHOWROOM ON FIRST FLOOR FOR RS.72 LAKHS FOR SHOWROO M NO.101-104. THE AO AFTER PERUSAL OF RETURN NOTICED RECEIPTS OF ONLY RS.4564000/- AND THUS HE BALANCE RS.7244000/- (1180 8000 4564000) WAS BROUGHT TO TAX BY HIM. THE AO APPAREN TLY HAS MIXED UP THE PROCEEDS FROM SALE OF DEVELOPMENTAL RI GHT WITH SALE OF FSI IN RELATION TO PLOT NO.1 AND 5. THE APPELLA NT HAS ARGUED THAT NO RECEIPTS IN RESPECT OF SALE OF FSI HAVE BEE N RECEIVED BY HEMPL OR M/S ADITI CONSTRUCTION AND THAT THE ENTIRE MONEY WAS RECEIVED BY M/S TIRUPATI CORPORATION FROM M/S TIRUP ATI PRIME ESTATE P. LTD. THE LD. AR ALSO FURNISHED THE AUDIT REPORT OF THE TIRUPATI CORPORATION AND THE LEDGER ACCOUNT OF APPE LLANT IN ITS BOOKS AND ALSO THE LEDGER ACCOUNT OF TIRUPATI PRIME ESTATE TO SHOW THAT THE AMOUNT WAS INDEED RECEIVED BY M/S TIR UPATI CORP AND THAT RS.1.6 CRORES PAID FOR DEVELOPMENTAL RIGHT S WAS ALSO CLAIMED AS EXPENDITURE BY TIRUPATI CORPORATION. 4.4 THE ONLY FACT WHICH ARISES FOR CONSIDERATION IS THAT AS PER SALE OF FSI AGREEMENT HEMPL IS MENTIONED AS THE SEL LER AND THAT SHREE TIRUPATI IS THE CONFIRMING PARTY AND THAT AS PER PAGE 14 OF SALE DEED (CONCERNING FSI RELATING TO OFFICE 105, 1 06, 205, 206, 305, 306, 405, 406) THE PURCHASER HAS PAID RS.46080 00/- TO THE SELLER VIDE CHEQUE NO.99484 DT. 9.5.06 AND FURTHER VIDE PAGE NO.12 OF SECOND FSI DEED FOR SPACE OF SHOW ROOMS (1 01, 102, 103, 104), THE SELLER IS TO RECEIVE RS.72 LAKHS VID E CHEQUE NO.992482 DT. 9.5.06. BOTH THE AGREEMENTS MENTION T HAT HEMPL IS TO RECEIVE RS.4608000/- AND RS.72 LAKHS FOR FSI RELATING TO PLOT NO.1&5 AND THERE IS NO MENTION OF ANY RECEIPT BY M/ S. TIRUPATI CORPORATION. 4.5 IT IS VEHEMENTLY ARGUED BEFORE ME THAT THE DEVE LOPMENT AGREEMENT WAS BETWEEN THE APPELLANT AND TIRUPATI CO RPORATION TO DEVELOP A COMPLEX AND THAT TILL COMPLETE PAYMENT OF RS.1.6 CRORES WAS NOT RECEIVED, TIRUPATI CORPORATION CANNOT BE SH OWN AS SELLER IN THE AGREEMENT FOR SALE OF FSI AND IN ANY CASE TH E LAND WAS IN THE NAME OF THE APPELLANT. IT IS ARGUED THAT TIRUP ATI CORPORATION IS THE TRANSFEROR OF FSI AND THAT NO AMOUNT HAS BEE N RECEIVED BY THE APPELLANT ON SALE OF FSI. IT IS ALSO INFORMED THAT SIMILAR DEVELOPMENT AGREEMENTS AND SALE OF FSI AGREEMENTS A RE ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 6 EXECUTED BY BUILDERS/DEVELOPERS IN BARODA AND THAT THIS FACT COULD BE GOT VERIFIED. 4.6 FROM ABOVE UNDISPUTED FACTS/CONCLUSIONS EMERGE: (I) THAT BY VIRTUE OF DEVELOPMENT AGREEMENT THE APP ELLANT HAD HANDED OVER THE POSSESSION OF PLOT NO.1 & 5 TO M/S TIRUPATI CORPORATION AND THE LATTER WAS PERMITTED TO DEVELOP A COMPLEX ON THE SAID PROPERTY AND THAT THE APPELLANT HAD LIEN O N THE SAID LAND FOR PERIOD TILL IT RECEIVES RS.1.6 CRORES. THE AGR EEMENT ALSO MENTIONS THAT M/S TIRUPATI CORPORATION IS ALLOWED T O COLLECT MONEY TOWARDS COST OF LAND AND FSI. FURTHER IN DEVELOPME NT AGREEMENT, PARA 3 IT IS MENTIONED THAT THE APPELLANT HAD AGREE D AND BOUND HIMSELF TO ANY SALE-DEED OR TRIPARTITE AGREEMENT IN REGARD TO OWNERSHIP OF FLAT/SHOPS SUBJECT TO FULFILLMENT OF L AND PAYMENTS. (II) THERE IS NO DENIAL THAT M/S TIRUPATI CORPORATI ON HAS RECEIVED RS.4608000/- VIDE CHEQUE NO.99484 DT. 9.5. 06 AND FURTHER RS.72 LAKHS VIDE CHEQUE NO.992482 DT. 9.5.0 6 THROUGH TWO SALE OF FSI AGREEMENTS AND THESE HAVE ALSO BEEN OFF ERED FOR TAX. (III) THE CONTENTIONS OF THE APPELLANT THAT ITS NAM E AS SELLER IN THE FSI AGREEMENTS WAS ONLY WITH THE PURPOSE THAT I T WAS THE OWNER OF LAND IN MUNICIPAL RECORDS AND ALSO BECAUSE COMPLETE PAYMENT OF LAND WAS NOT RECEIVED FROM M/S TIRUPATI CORPORATION, APPEAR TO BE CORRECT. (IV) IF THE CONTENTION OF THE APPELLANT IS NOT ACCE PTED THEN THERE WOULD BE NO NEED FOR TIRUPATI CORPORATION TO PAY RS .1.6 CRORES FOR LAND BY WAY OF DEVELOPMENT AGREEMENT. THE FACT IS THE APPELLANT AND ADITI CORPORATION HAVE RECEIVE D RS.1.6 CRORES TOWARDS SALE OF LAND AND FSI FROM M/S TIRUPATI CORPORATION. (V) IT IS NOT THE ARGUMENT OF THE AO NOR IT IS ESTA BLISHED THAT THERE IS A COLLUSION BETWEEN APPELLANT AND TIRUPATI CORPORATION OR THAT THESE ARE ASSOCIATE CONCERNS TO MANIPULATE REC EIPTS IN THE HANDS OF THE LATTER. (VI) THERE IS NO APPARENT PURPOSE OR REASON FOR WHI CH THE SALE OF FSI AMOUNTS SHOULD BE RECEIVED BY THE APPELLANT. T HE COMPLEX HAS BEEN DEVELOPED BY TIRUPATI CORPORATION WHO HAS INCURRED THE ENTIRE COST OF CONSTRUCTION AND HAS ALSO SECURED PU RCHASERS FOR FLATS/SHOPS IN THE COMPLEX. THERE IS NO EVIDENCE O N RECORD THAT THE APPELLANT HAS BECOME ENTITLED TO ANY FURTHER RE CEIPTS ON SALE OF FSI. ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 7 4.7 IN VIEW OF THE FOREGOING THE ACTION OF AO IN TA XING RS.72,44,000/- AS UNDISCLOSED SALES IN THE HANDS OF THE APPELLANT IS NOT CORRECT AND THE ADDITION IS THUS DIRECTED TO BE DELETED. GROUND NO.1 IS ALLOWED. 10. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF A.O. AND AUTHORISED REPRESENTATIVE SUPPORTED THE ORDER OF TH E CIT(A). 11. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD . IN THE INSTANT CASE, THE AO ENHANCED THE CAPITAL GAIN SHOWN BY THE ASSES SEE BY RS.72,44,000/- ON THE GROUND THAT AS PER TWO SALE D EED OF SALE OF FSI DATED 16.5.2006, FSI WERE SOLD FOR RS.46,08,000/- A ND RS.72,00,000/-, AND IN THE BOTH THE SALE DEEDS, THE ASSESSEES NAME APPEARED AS SELLER. THE ASSESSEE HAS SHOWN THE SALE CONSIDERATION OF RS .45,64,000/- ONLY. THEREFORE, THE AO ADDED RS.72,44,000/- TO THE INCOM E OF THE ASSESSEE. 12. ON APPEAL, THE CIT(A) DELETED THE ABOVE ADDITIO N BY OBSERVING AS UNDER: 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE, THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE APPELLANT AND THE REMAND REPORT. I HAVE ALSO CALLED FOR THE ASSESSME NT RECORDS AND EXAMINED THEM. THE CONTENTIONS AND THE RESPONSE OF THE APPELLANT WAS DISCUSSED WITH THE AO WHO WAS ALSO PR ESENT AND THE SUBMISSIONS OF THE APPELLANT WERE VERIFIED FROM THE ASSESSMENT RECORDS. FROM PERUSAL OF THE SALE DEEDS AND OTHER DOCUMENTS, IT APPEARS THAT AO SEEMS TO HAVE MIXED U P THE FACTS IN THE ASSESSMENT ORDER. THE DEVELOPMENT AGREEMENT DT. 18.07.05 BETWEEN HEMPL & M/S SHREE TIRUPATI CORPORA TION STIPULATES THAT LAND AREA MEASURING 4548.3 SQ. METE R IN R.S. NO.33 PLOT NO.1 & 5 AT VILLAGE: AKOTA, AKOTA MUJMAH UDA ROAD HAS BEEN SOLD BY HEMPL TO M/S TIRUPATI CORPORATION FOR RS.1,60,00,000/- AND THAT THE SELLER WAS TO RECEIVE RS.32 LAKHS DURING MARCH 05 TO JUNE 05 AND THE BALANCE RS.1,2 8,00,000/- WAS TO BE RECOVERED FROM CUSTOMERS TOWARDS UNITS BO OKED BY THEM AND THAT HEMPL WILL HAVE FULL LIEN OVER THE CO NSTRUCTION CARRIED OUT BY M/S TIRUPATI CORPORATION TILL THE AB OVE PAYMENT IS COMPLETED. FURTHER AS PER OUT OF COURT SETTLEMENT DT. 17.10.06 M/S ADITI CONSTRUCTION IS TO RECEIVE 2/3 RD AND HEMPL 1/3 RD OF THE ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 8 PAYMENTS FOR SALE OF PLOT NO.1 AND 5. HEMPL RECEIV ED RS.4564000/- FOR SALE OF DEVELOPMENT RIGHT AND M/S ADITI CONSTRUCTION RECEIVED RS.11436000/- AND THE RECEIPT S WERE OFFERED FOR TAXATION IN THE RETURN FOR AY 07-08. I T IS A FACT THAT AS PER PARA 3 OF THE DEVELOPMENT AGREEMENT DT. 18.07.0 5, HEMPL HAS TRANSFERRED THE DEVELOPMENTAL RIGHT AS WELL S T HE FSI FOR TOTAL PRICE OF RS.1.6 CRORES. 4.3.1 BY SALE-DEED DT. 16.5.06, HEMPL (MENTIONED A S SELLER) AND SHRI TIRUPATI CORPORATION (MENTIONED AS PARTY OF THE SECOND PART AND DEVELOPER AND CONFIRMING PARTY) SOL D FSI RIGHTS IN RESPECT OF OFFICE NO.105-106, 205-206, 305-306 & 40 5-406 TO TIRUPATI PRIME ESTATE P. LTD. FOR RS.4608000/- AND AT PAGE NO.14 OF THE SAID AGREEMENT THE PURCHASER HAS PAID TO THE SELLER RS.46,08,000/- VIDE CHEQUES NO.99484 DT. 9.5.06 DRA WN ON CANARA BANK, ALKAPURI FOR PURCHASE OF FSI AND THE S ELLER ALSO ACKNOWLEDGED THE RECEIPTS AS PER PAGE-15 OF THE AGR EEMENT. SIMILARLY VIDE SALE-DEED DT. 16.5.06, HEMPL (MENTIO NED AS SELLER) AND SHRI TIRUPATI CORPORATION (MENTIONED AS PARTY O F THE SECOND PART AND DEVELOPER AND CONFIRMING PARTY) SOLD FSI R IGHTS OF SHOWROOM ON FIRST FLOOR FOR RS.72 LAKHS FOR SHOWROO M NO.101-104. THE AO AFTER PERUSAL OF RETURN NOTICED RECEIPTS OF ONLY RS.4564000/- AND THUS HE BALANCE RS.7244000/- (1180 8000 4564000) WAS BROUGHT TO TAX BY HIM. THE AO APPAREN TLY HAS MIXED UP THE PROCEEDS FROM SALE OF DEVELOPMENTAL RI GHT WITH SALE OF FSI IN RELATION TO PLOT NO.1 AND 5. THE APPELLA NT HAS ARGUED THAT NO RECEIPTS IN RESPECT OF SALE OF FSI HAVE BEE N RECEIVED BY HEMPL OR M/S ADITI CONSTRUCTION AND THAT THE ENTIRE MONEY WAS RECEIVED BY M/S TIRUPATI CORPORATION FROM M/S TIRUP ATI PRIME ESTATE P. LTD. THE LD. AR ALSO FURNISHED THE AUDIT REPORT OF THE TIRUPATI CORPORATION AND THE LEDGER ACCOUNT OF APPE LLANT IN ITS BOOKS AND ALSO THE LEDGER ACCOUNT OF TIRUPATI PRIME ESTATE TO SHOW THAT THE AMOUNT WAS INDEED RECEIVED BY M/S TIR UPATI CORP AND THAT RS.1.6 CRORES PAID FOR DEVELOPMENTAL RIGHT S WAS ALSO CLAIMED AS EXPENDITURE BY TIRUPATI CORPORATION. 4.4 THE ONLY FACT WHICH ARISES FOR CONSIDERATION IS THAT AS PER SALE OF FSI AGREEMENT HEMPL IS MENTIONED AS THE SEL LER AND THAT SHREE TIRUPATI IS THE CONFIRMING PARTY AND THAT AS PER PAGE 14 OF SALE DEED (CONCERNING FSI RELATING TO OFFICE 105, 1 06, 205, 206, 305, 306, 405, 406) THE PURCHASER HAS PAID RS.46080 00/- TO THE SELLER VIDE CHEQUE NO.99484 DT. 9.5.06 AND FURTHER VIDE PAGE NO.12 OF SECOND FSI DEED FOR SPACE OF SHOW ROOMS (1 01, 102, 103, 104), THE SELLER IS TO RECEIVE RS.72 LAKHS VID E CHEQUE NO.992482 DT. 9.5.06. BOTH THE AGREEMENTS MENTION T HAT HEMPL IS TO RECEIVE RS.4608000/- AND RS.72 LAKHS FOR FSI RELATING TO PLOT ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 9 NO.1&5 AND THERE IS NO MENTION OF ANY RECEIPT BY M/ S. TIRUPATI CORPORATION. 4.5 IT IS VEHEMENTLY ARGUED BEFORE ME THAT THE DEVE LOPMENT AGREEMENT WAS BETWEEN THE APPELLANT AND TIRUPATI CO RPORATION TO DEVELOP A COMPLEX AND THAT TILL COMPLETE PAYMENT OF RS.1.6 CRORES WAS NOT RECEIVED, TIRUPATI CORPORATION CANNOT BE SH OWN AS SELLER IN THE AGREEMENT FOR SALE OF FSI AND IN ANY CASE TH E LAND WAS IN THE NAME OF THE APPELLANT. IT IS ARGUED THAT TIRUP ATI CORPORATION IS THE TRANSFEROR OF FSI AND THAT NO AMOUNT HAS BEE N RECEIVED BY THE APPELLANT ON SALE OF FSI. IT IS ALSO INFORMED THAT SIMILAR DEVELOPMENT AGREEMENTS AND SALE OF FSI AGREEMENTS A RE EXECUTED BY BUILDERS/DEVELOPERS IN BARODA AND THAT THIS FACT COULD BE GOT VERIFIED. 4.6 FROM ABOVE UNDISPUTED FACTS/CONCLUSIONS EMERGE: (I) THAT BY VIRTUE OF DEVELOPMENT AGREEMENT THE APP ELLANT HAD HANDED OVER THE POSSESSION OF PLOT NO.1 & 5 TO M/S TIRUPATI CORPORATION AND THE LATTER WAS PERMITTED TO DEVELOP A COMPLEX ON THE SAID PROPERTY AND THAT THE APPELLANT HAD LIEN O N THE SAID LAND FOR PERIOD TILL IT RECEIVES RS.1.6 CRORES. THE AGR EEMENT ALSO MENTIONS THAT M/S TIRUPATI CORPORATION IS ALLOWED T O COLLECT MONEY TOWARDS COST OF LAND AND FSI. FURTHER IN DEVELOPME NT AGREEMENT, PARA 3 IT IS MENTIONED THAT THE APPELLANT HAD AGREE D AND BOUND HIMSELF TO ANY SALE-DEED OR TRIPARTITE AGREEMENT IN REGARD TO OWNERSHIP OF FLAT/SHOPS SUBJECT TO FULFILLMENT OF L AND PAYMENTS. (II) THERE IS NO DENIAL THAT M/S TIRUPATI CORPORATI ON HAS RECEIVED RS.4608000/- VIDE CHEQUE NO.99484 DT. 9.5. 06 AND FURTHER RS.72 LAKHS VIDE CHEQUE NO.992482 DT. 9.5.0 6 THROUGH TWO SALE OF FSI AGREEMENTS AND THESE HAVE ALSO BEEN OFF ERED FOR TAX. (III) THE CONTENTIONS OF THE APPELLANT THAT ITS NAM E AS SELLER IN THE FSI AGREEMENTS WAS ONLY WITH THE PURPOSE THAT I T WAS THE OWNER OF LAND IN MUNICIPAL RECORDS AND ALSO BECAUSE COMPLETE PAYMENT OF LAND WAS NOT RECEIVED FROM M/S TIRUPATI CORPORATION, APPEAR TO BE CORRECT. (IV) IF THE CONTENTION OF THE APPELLANT IS NOT ACCE PTED THEN THERE WOULD BE NO NEED FOR TIRUPATI CORPORATION TO PAY RS .1.6 CRORES FOR LAND BY WAY OF DEVELOPMENT AGREEMENT. THE FACT IS THE APPELLANT AND ADITI CORPORATION HAVE RECEIVE D RS.1.6 CRORES TOWARDS SALE OF LAND AND FSI FROM M/S TIRUPATI CORPORATION. ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 10 (V) IT IS NOT THE ARGUMENT OF THE AO NOR IT IS ESTA BLISHED THAT THERE IS A COLLUSION BETWEEN APPELLANT AND TIRUPATI CORPORATION OR THAT THESE ARE ASSOCIATE CONCERNS TO MANIPULATE REC EIPTS IN THE HANDS OF THE LATTER. (VI) THERE IS NO APPARENT PURPOSE OR REASON FOR WHI CH THE SALE OF FSI AMOUNTS SHOULD BE RECEIVED BY THE APPELLANT. T HE COMPLEX HAS BEEN DEVELOPED BY TIRUPATI CORPORATION WHO HAS INCURRED THE ENTIRE COST OF CONSTRUCTION AND HAS ALSO SECURED PU RCHASERS FOR FLATS/SHOPS IN THE COMPLEX. THERE IS NO EVIDENCE O N RECORD THAT THE APPELLANT HAS BECOME ENTITLED TO ANY FURTHER RE CEIPTS ON SALE OF FSI. 4.7 IN VIEW OF THE FOREGOING THE ACTION OF AO IN TA XING RS.72,44,000/- AS UNDISCLOSED SALES IN THE HANDS OF THE APPELLANT IS NOT CORRECT AND THE ADDITION IS THUS DIRECTED TO BE DELETED. GROUND NO.1 IS ALLOWED. 13. THE DR RELIED ON THE ABOVE ORDER OF THE AO. 14. WE FIND THAT NO SPECIFIC DEFECT IN THE FINDINGS OF THE CIT(A) COULD BE POINTED OUT BY THE DR. WE FIND THAT IT IS NOT I N DISPUTE THAT THE ASSESSEE HAD GIVEN A PLOT OF LAND TO M/S.TIRUPATI C ORPORATION FOR DEVELOPMENT. AS THE ENTIRE PAYMENT FOR THIS TRANSF ER WAS NOT RECEIVED BY THE ASSESSEE, THE ASSESSEE HAD A LIEN OVER THE S AID PLOT OF LAND AND IN GOVERNMENT RECORDS, THE NAME OF THE ASSESSEE CON TINUED AS REGISTERED OWNER OVER THE SAID PLOT OF LAND. M/S.T IRUPATI CORPORATION CONSTRUCTED COMPLEX WHICH WAS THE PROPERTY OF M/S.T IRUPATI CORPORATION. THE FSI OVER THE SAID CONSTRUCTION AL SO BELONGED TO M/S.TIRUPATI CORPORATION. THE SAID M/S.TIRUPATI CO RPORATION VIDE TWO SALE DEEDS IN QUESTION SOLD THE FSI FOR RS.46,08,00 0/- AND RS.72,00,000/-. NAME OF THE ASSESSEE APPEARED ON T HOSE SALE DEEDS AS A VENDOR ALONG WITH THE NAME OF M/S.TIRUPATI COR PORATION AS CONFIRMING PARTY, BECAUSE, THE TITLE OVER THE SAID LAND WAS NOT YET RECORDED IN THE GOVERNMENT RECORDS IN THE NAME OF M /S.TIRUPATI CORPORATION. THE ENTIRE CONSIDERATION OF RS.46,08, 000/- AND RS.72,00,000/- WAS RECEIVED BY M/S.TIRUPATI CORPORA TION, AND THEY ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 11 HAVE DULY SHOWN THE SAME AS THEIR INCOME IN THEIR R ETURN OF INCOME. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVEN UE TO SHOW THAT ANY PART OF THE SAID CONSIDERATION OF RS.46,08,000/ - AND RS.72,00,000/- WAS ACTUALLY RECEIVED BY THE ASSESSEE OR THE ASSESS EE WAS THE OWNER OF THE COMPLEX, IN RESPECT OF WHICH FSI WAS SOLD. THE SALE CONSIDERATION OF RS.45,64,000/- WHICH WAS SHOWN BY THE ASSESSEE I N ITS RETURN OF INCOME WAS IN RESPECT OF SALE OF LAND AND HAD NOTHI NG TO DO WITH THE SALE OF FSI OF RS.46,08,000/- AND RS.72,00,000/-. THUS, THE AO CLEARLY ERRED IN ADJUSTING THE SALE CONSIDERATION OF RS.45, 64,000/- WITH THE SALE CONSIDERATION OF RS.46,08,000/- AND RS.72,00,000/-. 15. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CAS E, WE FIND NO ERROR IN THE FINDINGS OF THE CIT(A), WHICH IS CONFIRMED. THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 16. IN THE CROSS OBJECTION FILED BY THE ASSESSEE, T HE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A)-V, BARODA HAS GROSSLY ERRED IN L AW AND IN FACTS IN NOT DECIDING ON MERITS THE SECOND GROUND OF APPEAL FILED BEFORE HIM CONTENDING THAT THE AMOUNT OF RS.31,00,000/- ADDED BY THE LD. AO IN THE CASE OF M/S. ADITI CONSTRUCTION WHICH HAS BEEN OFFERED TO TAX IN THE CASE OF HINDUSTAN EARTH MOVERS PVT. LTD. (RESPO NDENT) HAS RESULTED INTO DOUBLE TAXATION. WHILE PASSING APPELLATE ORDER IN APPEAL NO.CAB(A)/V /179/09-10 DT. 27/1/11 IN THE CASE OF M/S. ADITI CONSTRUCTION FOR A.Y. 2007-08 THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS.31, 00,000/- OUT OF TOTAL SALES AMOUNT OF RS.1,33,00,000/- IN RESPECT O F PLOT NO.3 OF R.S. NO.33 PAIKI OF AKOTA, BARODA DIRECTING THE AO TO VE RIFY THE CASE OF HINDUSTAN EARTH MOVERS PVT. LTD. (RESPONDENT) AND T O DELETE THE ADDITION IF IT IS TAXED AGAIN IN THE CASE OF RESPON DENT. ALL THE DETAILS HAD BEEN FILED BEFORE THE LD. CIT(A ) ESTABLISHING THAT THE TOTAL AMOUNT OF RS.1,33,00,000/- HAS BEEN OFFERED TO TAX IN THE CASE OF HINDUSTAN EARTH MOVERS PVT. LTD. (RESPO NDENT). ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 12 CONSIDERING THE FACTS OF THE CASE THE LD. CIT(A) IS NOT JUSTIFIED IN NOT DECIDING THE 2 ND GROUND OF APPEAL ON MERITS IN THE CASE OF RESPONDENT. 2. THE RESPONDENT CRAVE LEAVE TO ADD, TO ALTER, TO AMEND AND/OR WITHDRAW THE GROUND OF CROSS OBJECTION EITHER BEFOR E OR AT THE TIME OF APPEAL HEARING. 17. THE AR OF THE ASSESSEE SUBMITTED THAT AS PER DE ED OF COMPROMISE APPROVED BY THE COURT, M/S.ADITI CONSTRUCTION HAS G IVEN UP THE RIGHT OF PLOT NO.3, AND THAT M/S. ADITI CONSTRUCTION WAS ENT ITLED TO RECEIVE RS.31,00,000/- WHICH HAS BEEN RECEIVED FROM M/S.SHR EE TIRUPATI INFRASTRUCTURE. IT IS SUBMITTED THAT AS REGARDS SA LE PRICE OF PLOT NO.3, SHREE TIRUPATI INFRASTRUCTURE HAS MADE THE PAYMENT AS PER DECREE OF THE COURT AS UNDER: PAYMENT MADE TO AMOUNT (RS.) HEMPL RS.1,02,00,000/- M/S.ADITI CONSTRUCTION RS. 31,00,000/- TOTAL RS.1,33,00,000/- IT IS SUBMITTED THAT M/S.ADITI CONSTRUCTION HAS TRA NSFERRED THE AMOUNT OF RS.31,00,000/- BY JOURNAL ENTRY IN ITS BOOKS OF ACCOUNT TO HEMPL, THE ASSESSEE COMPANY AND THE DETAILS ARE GIVEN AT PAGE NOS.57 AND 58 OF THE PAPER BOOK. IT IS FURTHER SUBMITTED THAT THE A SSESSEE COMPANY HAS CREDITED TOTAL AMOUNT OF RS.1,33,00,000/- IN ITS BO OKS OF ACCOUNT AND TRANSFERRED TO PROFIT & LOSS A/C. AS SALE OF PLOT N O.3, AS GIVEN IN PAGE NO.53 OF THE PAPER BOOK. ACCORDINGLY, THE ASSESSEE -COMPANY HAS OFFERED TO TAX RS.1,33,00,000/- IN ITS RETURN OF IN COME. THE CIT(A) VIDE ORDER NO.CAB(A)-V/117/09-10 DT.27/1/201 FOR A. Y.2007-08 IN THE CASE OF M/S.ADITI CONSTRUCTION CONFIRMED THE ADDITI ON OF RS.31,00,000/- DIRECTING THE ASSESSEE TO APPROACH BEFORE THE AO IN THE CASE OF HEMPL AND THE AO SHALL AFTER VERIFICATION REDUCE THE ASSE SSED INCOME OF RS.31,00,000/- IN THE CASE OF HEMPL IF IT IS FOUND TAXED TWICE. THE AR ITA NO.1379/AHD/2011 & CO NO.116/AHD/2011 M/S. HINDUSTAN EARTH MOVERS PVT. LTD. FOR AY 2007-08 13 OF THE ASSESSEE SUBMITTED THAT AGAINST CONFIRMED AD DITION OF RS.31,00,000/- THE APPEAL BEFORE THE TRIBUNAL HAS B EEN FILED IN ITA NO.688/AHD/2011 IN THE CASE OF M/S.ADITI CONSTRUCTI ON, AND THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY ALLO WING THE APPEAL VIDE ITS ORDER DATED 11.7.2014, AND ACCORDINGLY, THE MAT TER HAS BEEN REFERRED BACK TO THE CIT(A). A COPY OF THE ORDER O F THE TRIBUNAL IS PLACED AT SERIAL NO.34 OF THE PAPER BOOK. IN THIS VIEW OF THE MATTER, THE AR OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSIN G THE CROSS OBJECTION FOR ADJUDICATION. 18. IN VIEW OF THE ABOVE SUBMISSIONS OF THE AR OF T HE ASSESSEE, WE DISMISS THE CROSS OBJECTION FILED BY THE ASSESSEE, AS NOT PRESSED. 19. IN THE RESULT, APPEAL OF THE REVENUE AND THE CR OSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY THE 29 TH APRIL, 2015 AT AHMEDABAD. SD/ SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER