ITO, Ward-1(1), Burdwan, Burdwan V. Burdwan Development Authority, Burdwan

ITA 1972/KOL/2014

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0042 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-03-2021
• Assessment Year: 2006-2007
• Appeal Filed On: 22-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAUL
• Section: 148; 11; 139

Judgement Text

ITA NO. 1972/KOL/2014 ASS ESSMENT YEAR: 2006-2007 BUR DWAN DEVELOPMENT AUTHORITY 1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT & SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 1972/KOL/2014 ASSESSMENT YEAR: 2006-2007 INCOME TAX OFFICER,................................ ............................... APPELLANT WARD-1(1), BURDWAN, AAYAKAR BHAWAN, BURDWAN-713101 -VS.- BURDWAN DEVELOPMENT AUTHORITY,..................... ................ RESPONDENT 5 TH FLOOR, NEW ADMINISTRATIVE BUILDING, COURT COMPOUND, BURDWAN-713101 [PAN: AAALB0691A] APPEARANCES BY: SHRI SUPRIYO PAUL, ADDL. CIT, APPEARED ON BEHALF OF THE REVENUE SHRI SOUMITRA CHOUDHURY, ADVOCATE, APPEARED ON BEHA LF OF THE ASSESSEE DATE OF CONCLUDING THE HEARING : MARCH 15, 2021 DATE OF PRONOUNCING THE ORDER : MARCH 17, 2021 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), ASANSOL DATED 26.08.2014 WHEREBY HE DELETED THE TWO ADDITIONS OF RS.4,90,52, 168/- AND RS.50,00,000/- MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF INCOME FROM SALE OF DEVELOPM ENT RIGHTS IN RESPECT OF TWO PROJECTS NAMELY PODDAR PROJECT AND DHEERAJ P ROMOTERS RESPECTIVELY BY HOLDING THAT THE SAID AMOUNTS ARE N OT CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE FOR THE YEAR UNDER CONSID ERATION. 2. THE ASSESSEE IN THE PRESENT CASE IS A DEVELOPMEN T AUTHORITY CONSTITUTED UNDER SECTION 11 OF THE WEST BENGAL TOW N AND COUNTRY ITA NO. 1972/KOL/2014 ASS ESSMENT YEAR: 2006-2007 BUR DWAN DEVELOPMENT AUTHORITY 2 (PLANNING AND DEVELOPMENT) ACT, 1979 TO PROVIDE FAC ILITIES FOR PLANNED DEVELOPMENT OF RURAL AND URBAN AREA UNDER BURDWAN M UNICIPALITY OF WEST BENGAL. AS NOTICED BY THE ASSESSING OFFICER FROM TH E AUDITED STATEMENTS OF ACCOUNTS FOR THE FINANCIAL YEAR 2005-06 RELEVANT TO ASSESSMENT YEAR 2006-07, THE ASSESSEE HAD GENERATED SUBSTANTIAL AMO UNT OF SURPLUS. SINCE NO RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 WAS FILED BY THE ASSESSEE UNDER SECTION 139 OF THE INCOME TAX ACT, 1 961, A NOTICE UNDER SECTION 148 WAS ISSUED BY THE ASSESSING OFFICER TO THE ASSESSEE ON 06.07.2011. IN RESPONSE TO THE SAID NOTICE, THE RET URN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 27.07.2011 DECLARING ITS TOTAL INCOME AT NIL. 3. AS NOTICED BY THE ASSESSING OFFICER DURING THE C OURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE DURING THE YEA R UNDER CONSIDERATION AS WELL AS DURING THE SUBSEQUENT YEAR S I.E. A.Y. 2007-08 TO 2010-11 WAS ENGAGED IN THE BUSINESS OF SALE OF DEVE LOPMENT RIGHTS OF LAND AND/OR OTHER PROPERTIES UNDER PUBLIC-PRIVATE P ARTNERSHIP MODE FOR VARIOUS DEVELOPMENT PROJECTS VIZ. MEDICAL HUB, SOFT WARE /IT PARK, LOGISTIC HUB TOURISM/HOSPITALITY PROJECT, RESIDENTI AL TOWNSHIP/COMPLEXES, COMMERCIAL COMPLEXES ETC. AS F URTHER NOTED BY THE ASSESSING OFFICER, LAND FOR SUCH PROJECTS WAS A CQUIRED AND HANDED OVER TO THE ASSESSEE BY THE LAND ACQUISITION COLLEC TOR OF BURDWAN AND THE SAME IN TURN WAS TRANSFERRED BY THE ASSESSEE TO THE PRIVATE PARTNERS FOR EXECUTION OF VARIOUS PROJECTS. THE COMPENSATION PAYABLE TO LAND OWNERS WAS PAID BY THE ASSESSEE THROUGH LAND ACQUIS ITION COLLECTOR, BURDWAN OUT OF THE PREMIUM RECEIVED FROM THE LESSEE PARTNERS AND THE SURPLUS WAS RETAINED BY THE ASSESSEE AS REFLECTED I N ITS BALANCE-SHEET. FROM THE DETAILS OF SUCH AMOUNTS REFLECTED IN THE B ALANCE-SHEET OF THE ASSESSEE, IT WAS NOTICED BY THE ASSESSING OFFICER T HAT THE ASSESSEE HAD RECEIVED A TOTAL CONSIDERATION/PREMIUM FROM THE LES SEE PARTNERS AGGREGATING TO RS.9.07,31,221/- IN RESPECT OF PODDA R PROJECTS WHILE THE AMOUNT PAID TO LAND ACQUISITION COLLECTOR OF BURDWA N IN RESPECT OF THE ITA NO. 1972/KOL/2014 ASS ESSMENT YEAR: 2006-2007 BUR DWAN DEVELOPMENT AUTHORITY 3 SAID PROJECT WAS ONLY RS.4,16,79,053/- RETAINING TH E BALANCE AMOUNT OF RS.4,90,52,168/-. SIMILARLY THE ASSESSEE HAD RECEIV ED TOTAL CONSIDERATION/PREMIUM OF RS.52,63,350/- FROM DHEERA J PROMOTERS, WHICH WAS ENTIRELY RETAINED BY THE ASSESSEE. SINCE THE AS SESSEE COULD NOT OFFER ANY SATISFACTORY EXPLANATION IN RESPECT OF THESE SU RPLUS AMOUNTS RETAINED BY IT AMOUNTING TO RS.4,90,52,168/- AND RS.52,63,35 0/-, THE ASSESSING OFFICER TREATED THE SAME AS INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION FROM THE SALE OF DEVELOPMENT RIGHTS A ND ADDITIONS TO THAT EXTENT WERE MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE IN THE ASSESSMENT COMPLETED UNDER CONSIDERATION 143(3)/147 OF THE ACT VIDE AN ORDER DATED 26.03.2013. 4. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3)/147 OF THE ACT, AN APPEAL WAS PREFERRED BY T HE ASSESSEE BEFORE THE LD. CIT(APPEALS). DURING THE COURSE OF APPELLAT E PROCEEDINGS BEFORE THE LD. CIT(APPEALS), RELEVANT DETAILS WERE FURNISH ED BY THE ASSESSEE TO SHOW THAT THE TOTAL CONSIDERATION RECEIVED BY IT FR OM THE LESSEE PARTNERS IN RESPECT OF PODDAR PROJECTS WAS ONLY TO THE EXTEN T OF RS.5,16,09,181/-, WHILE THE REMAINING AMOUNTS OF RS.7,82,954/-, RS.2, 33,39,086/- AND RS.1,50,00,000/- WERE NOT RECEIVED DURING THE YEAR UNDER CONSIDERATION. THESE DETAILS FURNISHED BY THE ASSESSEE WERE FORWAR DED BY THE LD. CIT(APPEALS) TO THE ASSESSING OFFICER FOR THE LATTE R COMMENTS. IN THE REMAND REPORT SUBMITTED TO THE LD. CIT(APPEALS), TH E ASSESSING OFFICER ACCEPTED THE FACT THAT THE SUMS OF RS. 7,82,954/- A ND RS.2,33,39,086/- WERE ACTUALLY RECEIVED BY THE ASSESSEE ON 05.02.200 8 AND 05.05.2011 RESPECTIVELY AND NOT IN THE YEAR UNDER CONSIDERATIO N. AS REGARDS THE SUM OF RS.1,50,00,000/-, THE ASSESSING OFFICER STATED I N HIS REMAND REPORT THAT THE SAME HAD BECOME DUE TO THE ASSESSEE ON 08.02.20 06 WHEN THE RELEVANT AGREEMENT WAS SIGNED. THE ASSESSING OFFICE R, HOWEVER, COULD NOT BRING ANY EVIDENCE ON RECORD TO DISPUTE THE CLAIM O F THE ASSESSEE OF HAVING NOT RECEIVED THE SAID AMOUNT DURING THE YEAR UNDER CONSIDERATION AND KEEPING IN VIEW THE SAME AS WELL AS THE OTHER C OMMENTS MADE BY THE ITA NO. 1972/KOL/2014 ASS ESSMENT YEAR: 2006-2007 BUR DWAN DEVELOPMENT AUTHORITY 4 ASSESSING OFFICER IN THE REMAND REPORT, THE LD. CIT (APPEALS) DELETED THE ADDITION OF RS.4,90,52,168/- MADE BY THE ASSESSING OFFICER BY HOLDING THAT THE SAME WAS NOT CHARGEABLE TO TAX IN THE HAND S OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 5. AS REGARDS THE ADDITION OF RS.52,63,350/- MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF THE AMOUNT RECEIVED FROM M/S. DHEERAJ PROMOTERS, THE LD. CIT(APPEALS) FOUND FROM THE RELEVANT CLAUSE S OF THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH M/S. DHEERAJ PROM OTERS THAT THE SAID AMOUNT TO THE EXTENT OF RS.50,00,000/- WAS RECEIVED BY THE ASSESSEE ON ACCOUNT OF SECURITY DEPOSIT, WHICH WAS LIABLE TO BE ADJUSTED AGAINST THE FINAL PAYMENT ON EXECUTION OF THE PROJECT OR THE EX PIRY OF THE PERIOD OF 42 MONTHS, WHICHEVER IS EARLIER. THE LD. CIT(APPEALS) ACCORDINGLY HELD THAT THE SAID AMOUNT OF RS.50,00,000/- WAS LIABLE TO BE CONSIDERED FOR ASSESSMENT IN A.Y. 2008-09 AND NOT IN THE YEAR UNDE R CONSIDERATION I.E. A.Y. 2006-07. HE ACCORDINGLY DELETED THE ADDITION O F RS.50,00,000/- OUT OF THE TOTAL ADDITION OF RS.52,63,350/- MADE BY THE AS SESSING OFFICER ON THIS ISSUE. 6. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FO LLOWING GROUNDS:- (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DELETING INCOME OF THE ASSE SSEE FROM SALE OF DEVELOPMENT RIGHTS TO THE TUNE OF RS.4,90,52,168/- BEING NOT ACTUALLY RECEIVED IN THE RELEVANT PREVIOUS YEAR. (2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.4,90,52,168/-, WHEREAS HE HIMSELF HAS OBSERVED THAT RS.1,50,00,000/- HAD BECOME DUE FOR RECEIPT ON 08.03.2006. (3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.50,00,000/- HOLDING THAT REVENUE RECOGNITION CAME FIRST ON 03.10.2007. ITA NO. 1972/KOL/2014 ASS ESSMENT YEAR: 2006-2007 BUR DWAN DEVELOPMENT AUTHORITY 5 (4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE VIEW TAKEN BY THE LD. CIT(A) IN REGARD TO REVENUE RECOGNITION ON ACCRUAL BASIS AND TAXABILITY OF INCO ME ON RECEIPT BASIS IS CONTRADICTORY AND NOT IN CONFOR MITY WITH ACCOUNTING STANDARDS. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS REGARDS T HE COMMON ISSUE RAISED IN GROUNDS NO. 1, 2 & 3 RELATING TO THE DELE TION BY THE LD. CIT(APPALS) OF THE ADDITION OF RS.4,90,52,168/- MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF INCOME OF THE ASSESSEE FROM P ODDAR PROJECTS, IT IS OBSERVED THAT THE SAID ADDITION WAS MADE BY THE ASS ESSING OFFICER ON THE BASIS THAT OUT OF THE TOTAL CONSIDERATION OF RS.9,0 7,31,221/- RECEIVED BY THE ASSESSEE FROM THE LESSEE PARTNERS, A SUM OF RS. 4,16,79,053/- ONLY WAS PAID BY THE ASSESSEE TO THE LAND ACQUISITION COLLEC TOR OF BURDWAN AND THE BALANCE AMOUNT OF RS.4,90,52,168/- RETAINED BY THE ASSESSEE REPRESENTED ITS INCOME FROM PODDAR PROJECTS. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE, HOWEVER, FURNISHED THE R ELEVANT DETAILS TO SHOW THAT THE SAID AMOUNT WAS ACTUALLY NOT RECEIVED DURING THE YEAR UNDER CONSIDERATION AND SINCE THE ASSESSING OFFICER COULD NOT REBUT OR CONTROVERT THIS ASSERTION MADE BY THE ASSESSEE, THE LD. CIT(APPEALS) DELETED THE ADDITION OF RS.4,90,52,168/- MADE BY TH E ASSESSING OFFICER BY HOLDING THAT THE SAID AMOUNT NOT RECEIVED BY THE AS SESSEE DURING THE YEAR UNDER CONSIDERATION COULD NOT BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. 8. AT THE TIME OF HEARING BEFORE US, THE LD. D.R. H AS NOT BROUGHT ANYTHING ON RECORD TO DISPUTE THE FINDING/ OBSERVAT ION ARRIVED AT BY THE LD. CIT(APPEALS) WHILE GIVING RELIEF TO THE ASSESSE E ON THIS ISSUE THAT THE AMOUNT IN QUESTION WAS NOT RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION BUT THE SAME WAS ACTUALLY RECEI VED IN THE SUBSEQUENT YEARS. HE, HOWEVER, HAS CONTENDED BY REFERRING TO G ROUND NO. 4 RAISED BY THE REVENUE IN THIS APPEAL THAT THE AMOUNT IN QUEST ION, EVEN THOUGH WAS ITA NO. 1972/KOL/2014 ASS ESSMENT YEAR: 2006-2007 BUR DWAN DEVELOPMENT AUTHORITY 6 NOT RECEIVED BY THE ASSESSEE IN THE YEAR UNDER CONS IDERATION, HAD BECOME DUE AND ACCRUED TO THE ASSESSEE IN THE YEAR UNDER C ONSIDERATION AND THE SAME, THEREFORE, WAS RIGHTLY ASSESSED BY THE ASSESS ING OFFICER IN THE HANDS OF THE ASSESSEE FOLLOWING THE MERCANTILE SYST EM OF ACCOUNTING. IN THIS REGARD, IT IS NOTED THAT THIS WAS NOT THE BASI S OF WHICH THE AMOUNT IN QUESTION WAS ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, INASMUCH AS, THERE IS NO FINDING/OBSERVATION RECORDED BY THE ASSESSING OFFIC ER IN THE ASSESSMENT ORDER TO SHOW AS TO HOW THE AMOUNT IN QUESTION HAD ACCRUED AS AN INCOME TO THE ASSESSEE IN THE YEAR UNDER CONSIDERATION AND HOW IT WAS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE IN T HE YEAR UNDER CONSIDERATION BY THE MERCANTILE SYSTEM OF ACCOUNTIN G FOLLOWED BY THE ASSESSEE. AS A MATTER OF FACT, THE SAID AMOUNT WAS ASSESSED BY THE ASSESSING OFFICER IN THE YEAR UNDER CONSIDERATION M AINLY ON THE BASIS THAT THE SAME WAS ACTUALLY RECEIVED BY THE ASSESSEE DURI NG THE YEAR UNDER CONSIDERATION AND THE SAME REPRESENTING SURPLUS OVE R THE AMOUNT PAID TO THE LAND ACQUISITION OFFICER OF BURDWAN BEING RETAI NED BY THE ASSESSEE REPRESENTED THE INCOME FOR THE YEAR UNDER CONSIDERA TION. THE SAID BASIS, AS ALREADY NOTED BY US, HOWEVER, TURNED OUT TO BE W RONG. MOREOVER AS EXPLAINED BY THE LD. COUNSEL FOR THE ASSESSEE, PROJ ECT COMPLETION METHOD WAS BEING FOLLOWED BY THE ASSESSEE AND THE RELEVANT PROJECT VIZ. PODDAR PROJECTS HAVING BEEN COMPLETED IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2009-10, THE ENTIRE INCOME FROM THE SAID PROJECT WAS ACTUALLY ACCRUED TO THE ASSESSEE IN A.Y. 2009-10 AN D THE SAME WAS ACCORDINGLY RECOGNIZED AND OFFERED TO TAX IN THAT Y EAR AS IS EVIDENT FROM THE ASSESSMENT ORDER DATED 20.12.2016 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3)/147 OF THE ACT. WE, THEREFORE, FIND NO MERIT IN GROUNDS NO. 1, 2 & 4 RAISED BY THE REVENUE IN THIS APPEAL AND DISMISS THE SAME. 9. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 3 RE LATING TO THE DELETION BY THE LD. CIT(APPEALS) OF THE ADDITION OF RS.50,00,000/- MADE ITA NO. 1972/KOL/2014 ASS ESSMENT YEAR: 2006-2007 BUR DWAN DEVELOPMENT AUTHORITY 7 BY THE ASSESSING OFFICER ON ACCOUNT OF AMOUNT RECEI VED FROM DHEERAJ PROMOTERS, IT IS OBSERVED THAT THE SAID AMOUNT ACTU ALLY RECEIVED BY THE ASSESSEE ON 11.04.2004 REPRESENTED SECURITY DEPOSIT RECEIVED BY THE ASSESSEE AS FOUND BY THE LD. CIT(APPEALS) FROM THE RELEVANT CLAUSES OF THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH M/S. DH EERAJ PROMOTERS. AS FURTHER FOUND BY THE LD. CIT(APPEALS) FROM THE SAID AGREEMENT, THE SAID AMOUNT OF SECURITY DEPOSIT WAS LIABLE TO BE ADJUSTE D AGAINST THE FINAL AMOUNT ON THE EXECUTION OF THE PROJECT OR THE EXPIR Y OF THE PERIOD OF 42 MONTHS, WHICHEVER IS EARLIER. HE ACCORDINGLY HELD T HAT THE SAID AMOUNT OF RS.50,00,000/- COULD BE CONSIDERED FOR ASSESSMENT I N A.Y. 2008-09 AND NOT IN A.Y. 2006-07, I.E. THE YEAR UNDER CONSIDERAT ION. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD A COPY OF THE ASSESSMENT ORDER DATED 20.12.2016 PASSE D BY THE ASSESSING OFFICER UNDER SECTION 143(3)/147 OF THE ACT FOR A.Y . 2009-10 TO SHOW THAT THE AMOUNT OF RS.50,00,000/- IN QUESTION HAS ALREAD Y BEEN TAXED IN THE HANDS OF THE ASSESSEE FOR A.Y. 2009-10 WHEN THE REL EVANT PROJECT WAS COMPLETED AND THE AMOUNT IN QUESTION ACTUALLY ACCRU ED TO THE ASSESSEE AS INCOME ON THE BASIS OF PROJECT COMPLETION METHOD FO LLOWED BY IT. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES OF THE CA SE, WHICH HAVE REMAINED UNDISPUTED BY THE LD. D.R., WE FIND NO INF IRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) DELETING THE ADDITION OF RS.50,00,000/- MADE BY THE ASSESSING OFFICER AND UPHOLDING THE SAM E, WE DISMISS GROUND NO. 3 OF THE REVENUES APPEAL. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 17, 202 1. SD/- SD/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESI DENT KOLKATA, THE 17 TH DAY OF MARCH, 2021 COPIES TO : (1) INCOME TAX OFFICER, WARD-1(1), BURDWAN, AAYAKAR BHAWAN, BURDWAN-713101 ITA NO. 1972/KOL/2014 ASS ESSMENT YEAR: 2006-2007 BUR DWAN DEVELOPMENT AUTHORITY 8 (2) BURDWAN DEVELOPMENT AUTHORITY, 5 TH FLOOR, NEW ADMINISTRATIVE BUILDING, COURT COMPOUND, BURDWAN-713101 (3) COMMISSIONER OF INCOME TAX (APPEALS), ASANSOL ; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.