Sirsa New Towns (P) Ltd., New Delhi V. ITO, Circle- 23(4), New Delhi

ITA 1429/DEL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7701 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 21-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GAUTAM JAIN SHRI LALIT MOHAN
• Keywords: Unexplained cash credit

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI O.P.KANT, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO. 1429/DEL/2019 ASSESSMENT YEAR: 2014-15 SIRSA NEW TONWNS (P) LTD., VS ITO, CIRCLE-23(4), B-4/45, SAFDARJUNG ENCLAVE, NEW DELHI. NEW DELHI. PAN AALCS7872A (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI GAUTAM JAIN, ADVOCATE SHRI LALIT MOHAN, CA RESPONDENT BY: SHRI N.K. BANSAL, SR. DR DATE OF HEARING: 17/7/2019 DATE OF ORDER : 24 /7/2019 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 01.01.2019 IN APPEAL NO.83/16- 17/2745 FOR THE ASSESSMENT YEAR 2014-15 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-30, NEW DELHI {LD, CIT(A)}, ASSESSEE PREFERRED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF INFRASTRUCTURE DEVELOPMENT. FOR THE ASSTT. YEAR 2014-15, THEY HAVE FILED THEIR RETURN OF INCOME ON 30.11.2014 SHOWING THE INCOME AS NIL 2 AND THE BOOK PROFITS AT RS.1,74,031/-. DURING THE COURSE OF ASSESSMENT, LEARNED AO NOTED THAT THERE WAS AN ADJUSTMENT IN THE VALUE OF LAND FROM RS.5,86,38,310/- TO RS.3,79,21,141/- COMPUTED AT RS.2,01,17,175/- IN THE BALANCE UNDER THE HEAD INVENTORY HELD AS STOCK BY THE ASSESSEE COMPANY BUT THE SAME WAS NOT REFLECTED IN THE PROFIT AND LOSS ACCOUNT NOR WAS IT TAKEN FOR THE PURPOSE OF COMPUTING THE TAXES THEREON. WHEN THE LEARNED AO LOOKED INTO THE BANK STATEMENT OF THE ASSESSEE, HE FOUND ONLY THREE ENTRIES OF MINOR AMOUNTS WITHOUT REFLECTING THIS ADJUSTMENT. 3. ASSESSEE FILED THE DETAILS OF THE ADJUSTMENT IN A PAPER SHOWING THAT THE ASSESSEE HAD SOLD AN AREA OF 3.40 ACRES AT RS.2,07,17,173.05. HOWEVER, NO SALE DEED WAS FILED AS OBSERVED BY THE LD. AO. LEARNED AO, THEREFORE HELD THAT THE LAND ADJUSTMENT WAS TO BE TAKEN AS UNEXPLAINED CASH CREDIT FOUND IN THE BOOKS OF THE ASSESSEE WITHOUT ANY PRUDENT EXPLANATION AND ADDED A SUM OF RS.2,07,17,174/- TO THE INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE ADDITION, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND SUBMITTED THAT ASSESSEE TO THE EXTENT OF 10.712 ACRES OF THEIR LAND PLACED IN COMMON POOL WITH M/S VIKAS BUILDMART P. LTD. AND ACCORDING TO THE AGREEMENT BETWEEN THEM M/S VIKAS BUILDMART WAS TO DEVELOP THE LAND AND THE ASSESSEE WOULD BE ENTITLED TO RECEIVE THE SALE PROCEEDS ONCE THE ENTIRE DEVELOPMENT WAS COMPLETED . ASSESSEE FILED AN AGREEMENT DATED 30.5.2008 WHEREIN CLAUSE 5 EXPRESSLY STATES THAT THE ASSESSEE WAS ENTITLED TO 1000 SQ. YARDS PER ACRE OR ITS EQUIVALENT VALUE OUT OF COMPLETE SALE PROCEEDS 3 AND SHALL BE PAID THE SAME AFTER THE COMPLETION OF THE PROJECT. HAVING NOTICED THE SAID CLAUSE, LD. CIT(A) RECORDED THAT SUCH A CLAUSE IS ONLY AN ATTEMPT NOT TO SHOW THE REVENUE AS AND WHEN THE SAME WAS EARNED BUT IT IS A DEVISE TO DEFER THE REVENUE THAT HAD ALREADY BEEN EARNED. LEARNED CIT(A), THEREFORE, DISMISSED THE APPEAL AND CONFIRMED THE ADDITION. 5. ASSESSEE IS, THEREFORE, BEFORE US IN THIS APPEAL REITERATING THE FACTS SUBMITTED BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THE AGREEMENT BETWEEN THE ASSESSEE AND THE DEVELOPER WHERE-UNDER NO CONSIDERATION OF SALE OF LAND COULD BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE TILL THE PROJECT IS COMPLETE BUT THE ASSESSEE WAS REQUIRED TO RECORDING OF BOOKS OF ACCOUNTS BY DEDUCTION OF THE VALUE OF ASSETS AND CORRESPONDING VALUE OF LIABILITY. 6. IT IS THE SUBMISSION ON BEHALF OF THE ASSESSEE THAT ON THE FACE OF THE AGREEMENT, THE ASSESSEE WOULD BE ENTITLED TO RECEIVE THE AMOUNTS ONLY AFTER THE COMPLETION OF THE PROJECT AND EVEN IN CASE OF ANY AREA BELONGING TO THE ASSESSEE WAS SOLD TO THE DEVELOPER DURING THE DEVELOPMENT OF THE SITE, SUCH MONEY SHALL BE ADJUSTED BY THE DEVELOPER IN THE DEVELOPMENT AND THE ASSESSEE SHALL NOT BE ENTITLED TO ANY MONEY RECEIVED THEN AND THERE. HE INVITED OUR ATTENTION TO THE AGREEMENT DATED 30.5.2008. IT IS FURTHER SUBMITTED THAT THE DEVELOPER HAD SHOWN THE SALE PROCEEDS AS REVENUE FROM OPERATION IN THEIR PROFIT AND LOSS ACCOUNT AND ALSO VIDE NOTE 17 THEY HAVE SHOWN THIS AMOUNT AS THE SALE OF PLOTTED LAND. BASING ON THIS FINANCIAL, 4 INCOME OF THE DEVELOPER WAS COMPUTED AND WAS OFFER TO TAX AND BY ORDER DATED 26.12.2016, THE RETURN OF INCOME WAS SCRUTINIZED AND WAS ACCEPTED. SINCE THE AMOUNT WAS OFFERED TO TAX BY THE DEVELOPER, THE SAME CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE ALSO. 7. PER CONTRA, LEARNED DR HEAVILY RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE IS THE OWNER OF THE LAND AND ON THE SALE OF THE SAME, HE HAD RIGHTLY REDUCED THE INVENTORY AND VALUED IT AS RS.2,07,17,173.05 AND, THEREFORE, IT IS NOT OPEN FOR THE ASSESSEE TO TAKE SHELTER UNDER THE AGREEMENT WITH A VIEW TO DEFER THE PAYMENT OF TAX. 8. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. PARA NO.5 OF THE AGREEMENT DATED 30.5.2008 READS AS FOLLOWS: 5(A) IN CONSIDERATION OF THE SAID LAND THE OWNER SHALL BE ENTITLED TO 1000 SQ. YDS (PER ACRE) OF DEVELOPED PLOT IN CASE OF PLOTTED COLONY, RESIDENTIAL PLOTTED COLONY IN THE SAID TOWNSHIP AFTER THE COMPLETION OF THE ENTIRE DEVELOPMENT OF THE SITE. HOWEVER, IN CASE ANY AREA BELONGING TO THE OWNER IS SOLD BY THE DEVELOPER DURING THE DEVELOPMENT OF THE SITE, THE MONEY RECEIVED ON BOOKING OR SALE SHALL BE ADJUSTED BY THE DEVELOPER IN THE DEVELOPMENT AND THE OWNER SHALL NOT BE ENTITLED TO ANY MONEY RECEIVED BY THE DEVELOPER IN THIS RESPECT. IT IS EXPRESSLY AGREED THAT THE AREA OF 1000 SQ. YDS PER ACRE OR ITS EQUIVALENT VALUE OUT OF COMPLETE SALE PROCEEDS SHALL BE GIVEN BACK TO THE OWNER AFTER THE COMPLETION OF THE PROJECT. (B) THE OWNERS SHALL HAVE A RIGHT TO BOOK/SELL ITS SHARE AS PER ITS DIRECTION AND WITH MUTUAL CONSENT OF THE DEVELOPMENT. 5 9. THIS CLEARLY ARTICULATES THAT IN CONSIDERING OF PLACING THE LAND IN POOL FOR DEVELOPMENT, THE ASSESSEE IS ENTITLED TO 1000 SQ. YARDS PER ACRE OF DEVELOPED PLOT AND WOULD BE ENTITLED TO SUCH EXTENT OF LAND OR ITS VALUE AFTER COMPLETION OF THE PROJECT; AND THAT EVEN IN CASE THE DEVELOPER SELLS THE AREA BELONGING TO THE ASSESSEE, THE SALE PROCEEDS SHALL BE ADJUSTED BY THE DEVELOPER IN THE DEVELOPMENT AND THE ASSESSEE SHALL NOT BE ENTITLED TO ANY MONEY RECEIVED BY THE DEVELOPER IN THAT RESPECT AND OBVIOUSLY, IT IS SO BECAUSE THE ASSESSEE AGREED TO RECEIVE THE CONSIDERATION AMOUNT ONLY AFTER THE COMPLETION OF THE PROJECT. 10. BY WAY OF PAGE NOS. 58 TO 72, THE FINANCIALS OF M/S VIKAS BUILDMART ARE FILED. THE PROFIT AND LOSS ACCOUNT AT PAGE 59 OF THE PAPER BOOK SHOWS THAT M/S VIKAS BUILDMART HAD SHOWN THE REVENUE FROM OPERATIONS AND VIDE NOTE 17 THEY SPECIFIED THAT THIS AMOUNT RELATABLE TO THE SALE OF PLOTTED LAND. A LOSS OF RS.11,18,11,923/- AS SHOWN IN THE PROFIT AND LOSS ACCOUNT AND IT WAS REDUCED TO RS.7,16,90,965/- WHILE COMPUTING THE INCOME FOR TAX PURPOSES. ODER DATED 26.12.2016 IS IN RESPECT OF M/S VIKAS BUILDMART. IT IS, THEREFORE, CLEAR THAT THE INCOME FROM THE SALE OF LAND WAS ACCOUNTED BY M/S VIKAS BUILDMART P. LTD. WHILE COMPUTING THEIR INCOME AND FILING THE RETURN OF INCOME. 11. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY AVOIDANCE OR DEFERMENT OF TAX ON THE SALE PROCEEDS OF THE LAND. THE SALE PROCEEDS WERE OFFERED TO TAX IN THE HANDS OF M/S VIKAS BUILDMART P. LTD. AS IS EVIDENT FROM THE COMPUTATION OF INCOME IN THE CASE OF M/S VIKAS 6 BUILDMART P. LTD. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE CONTENTIONS OF THE REVENUE AND THE ADDITION IS MISCONCEIVED ONE. WE ACCORDINGLY, DIRECT THE LEARNED AO TO DELETE THE SAME. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JULY, 2019. SD/- SD/- (O.P. KANT) (K. NARASIMHA CHARY) ACCOUNTANT MEMEBR JUDICIAL MEMBER DATED 24 TH JULY, 2019 VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSISTANT REGISTRAR 7 DRAFT DICTATED 18.7.2019 DRAFT PLACED BEFORE AUTHOR 19.7.2019 APPROVED DRAFT COMES TO THE SR.PS/PS ORDER SIGNED AND PRONOUNCED ON FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER. DATE OF UPLOADING ON THE WEBSITE