Income Tax Officer, TDS Ward - 18(2), Bangalore V. M/s. Lokseva Housing Co-op Society Ltd., Bengaluru

ITA 219/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7074 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 02-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH
• Keywords: Non-deduction of tax; Tax effect
• Section: 194C; 201(1); 2

Judgement Text

I N THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND S HRI LALIET KUMAR, JUDICIAL MEMBER ITA NO S . 2 19 TO 2 2 5 / BANG/20 17 (ASST. YEAR 20 08 - 09 TO 2014 - 15 ) THE INCOME - TAX OFFICER , TDS WARD - 18 ( 2 ), B ENGALURU. . APPELLANT VS. M/S LOKSEVA HOUSING CO - OPERATIVE SOCIETY LTD. , PARK ROAD , B E NGAL U R U . . RESPONDENT APPELLANT BY : SHRI B.R RAMESH , J CIT RESPONDENT BY : SHRI RAVI SHANKAR , A DVOCATE DATE OF HEARING : 29 - 1 1 - 2017 DATE OF PRONOUNCEMENT : 6 - 1 2 - 2017 O R D E R PER SHRI JASON P BOAZ , ACCOUNTANT MEMBER : TH E S E ARE A BUNCH OF S EVEN APPEAL S BY THE REVENUE , DIRECTED AGAINST THE ORDER COMMISSIONER OF INCOME - TAX ( APPEALS ) 13 , BANGALORE DATED 2 3 / 1 1 /2016 FOR THE ASSESSMENT YEAR S 200 8 - 0 9 TO ITA NO S . 2 19 - 2 2 5 /B/1 7 2 201 4 - 1 5 . SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF TOGETHER BY WAY OF THIS ORDER. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER: - 2.1 THE ASSESSEE IS A CO - OPERATIVE SOCIETY ENGAGED IN THE ACTIVITY OF IDENTIFYING SUITABLE L ANDS AND FORMING A RESIDENTIAL LAYOUT FOR ALLOTMENT OF RESIDENTIAL SITES TO ITS MEMBERS . THE ASSESSING OFFICER ( AO ) CALLED FOR IN FORMATION U/S 13 3 (6) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT ) PERTAINING TO THE DETAILS OF PAYMENTS MADE TO DEVELOPERS/CONTRACTORS AND TAX DEDUCTED THEREON. FROM THE DETAILS FILED , THE AO NOTICED THAT THE ASSESSEE HAD ENTERED INTO CERTAIN AGREEM ENTS AND MOU S , WITH THE DEV E LOPER/CONTRACTOR M/S JAYA SURY A DEVELOPERS , FOR CARRY ING OUT THE ABOVE ACTIVITIES AND HAD FAILED TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE TO THESE PARTIES WITH WHOM IT HAD ENTERED INTO AGREEMENTS FOR THE ACQUISITION OF LAND AN D FORMATION OF RESIDENTIAL LAYOUT FOR THE BENEF IT OF ITS MEMBERS ( REQUIRING THE CARRYING OUT OF CIVIL WORK SUCH AS LAYING OF RO A DS, DRAINAGE, ELECTRIFICATION , ETC.); WHICH WERE IN THE NATURE OF COMPOSITE WORK CONTRACTS. THE AO, INTER ALIA, NOTICED THAT T HE AFOR ES AID LAYOUT IS TO BE DEVELOPED AS PER THE ASSESS E E S SPECIFICATIONS AND THE WORDS PROCUREMENT OF L A ND MEANT TH A T THE DEVELOPER DOES NO T OWN ANY LAND AS ON THE DATE OF AGREEMENT. IN THAT VIEW OF THE MATTER, THE AO HELD THAT THE AFORESAID WORK, CARR IED O U T BY THE DEVELOPER/CONTRACTOR ON BEHALF OF THE ASSESSEE, IS THE NATURE OF WORKS CONTRACT AND THEREFORE THE PROVISIONS OF S E C. 194C OF THE ACT WAS ATTRACTED . S INCE THE ITA NO S . 2 19 - 2 2 5 /B/1 7 3 ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE ON PAYMENTS ITS MADE TO DEVELOPERS/CON TRACT OR S AS REQUIRED U/S 194C OF THE ACT ; AO HELD THE ASSESSEE TO BE AN ASSESSEE IN DEFAULT U/S 201(1) OF THE ACT AND ALSO TO BE CHARGED THE CONSEQUENTIAL INTER E ST U/S 201(1A) OF THE ACT. THE EXPLANATIONS PUT FORTH BY TH E A SSESSEE DID NOT FIND FAVOUR W I TH THE AO AND HE PASSED ORDERS U/S 201(1) AND 201(1A) OF THE ACT FOR ASST. YEARS 2008 - 09 TO 2014 - 15 ALL DATED 28/2/2014 HOLDING THE ASSESSEE TO BE AN ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE BY IT TO DEVELOPER/CONTRACTOR AS REQUIRED U/S 194C OF THE ACT AS IT WAS IN THE NATURE OF WO R KS CONTRACT. 2. 2 AGGRIEVED BY THE ORDERS U/S 201(1) AND 201(1A) OF THE ACT DATED 28/2/2014 FOR ASST. YEAR 2008 - 09 TO 2014 - 15 , THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A) - 13, BANGALORE. THE LD CIT(A) ALLOWED THE AFORESAID APPEALS FILED BY THE ASSESSEE FOR ASST. YEARS 2008 - 09 TO 2014 - 15 VIDE A COMMON ORDER DATED 2 3 /1 1 /2016 HOLDIN G THAT THE ASSESSEE WAS NOT L I ABLE TO DEDUCT TAX AT SOURCE ON THE PAYMENTS IT MADE TO DEVELOPERS/ CONTRACTORS AS THE PROVISION S OF SEC. 194C OF THE ACT W ERE NOT A TTRACTED IN THE CASE ON HAND. . 3.1 REVENUE, BEING AGGRIEVED BY THE ORDERS OF THE CIT(A) - 13, BANGALORE DATED 2 3 /1 1 /2016 FOR ASST. YEARS 2008 - 09 TO 2014 - 15 , HAS FILED THESE APPEALS BEFORE THE TRIBUNAL RAISING THE FOLLOWIN G COMMON GROUN D S FOR THE AFORESAID ASST. YEARS. 1. THE ORDER OF CIT(A) IS OPPOSED TO THE FACTS AND NATURE OF THE CASE ON HAND. ITA NO S . 2 19 - 2 2 5 /B/1 7 4 2. THE ID. CIT (A) ERRED IN HOLDING THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE U/S. 194C FROM THE PAYMENTS MADE TO DEVELOPER. 3 THE LD. CIT(A) ERRED IN DELETING THE DEMAND U/S. 201(1) AND 201(1A). 4 . THE ID. CIT (A) OUGHT TO HAVE CONSIDERED THE FACT THAT AS PER THE ASSESSEE'S AGREEMENT WITH THE DEVELOPER THE WORKS TO BE CARRIED OUT LIKE FOR PROCURING OF LAND, DEVELOPING, CONVERSION, PLAN FOR APPROVAL, DRAINAGE, LAYING ROADS ETC. CLEARLY ATTRACTED PROVISIONS OF SECTION 194C. 5. THE ID. CIT (A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE DEVELOPER ARE IN THE NATURE OF COMPOSITE CONTRACTS FOR WORKS FOR WHICH PROVISIONS OF SECTION 194C IS CLEARLY APPLICABLE. 6. THE LD. CIT(A) ERRED IN RELYING ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO - OPERATIVE SOCIETIES IN ITA NO. 1275 OF 2006 AND THE TAT'S ORDER IN THE CASE OF M/S. KAUTILYA HOUSE BUILDING CO - OPERATIVE SOCIETY LIMITED IN ITA NO. 1324 TO 1337/BANG/ 2015 DATED 7.4.2016 WHILE ALLOWING THE ASSESSEE'S APPEAL WHICH HAVE BEEN ACCEPTED BY THE DEPARTMENT ONLY FOR LOW TAX EFFECT AND NOT IN PRINCIPLE. ITA NO S . 2 19 - 2 2 5 /B/1 7 5 FOR THESE AND OTHER GROUNDS THAT MAY BE RAISED DURING THE COURSE OF APPEAL AND ACTUAL HEARING IT IS PRAYED THA T THE ORDER PASSED BY THE AO U/S. 201(1) AND 201(1A) BE UPHELD AND THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE AND CANCELLED. 3.2 THE GROUNDS RAI S ED (SUPRA) RELATES TO THE SINGLE ISSUE PERTAI NI NG TO THE DELETION O F THE DEMAND S RAI S ED U/S 201(1) AND 201(1A) OF THE ACT BY THE LD CIT(A) BY FOLLOWING THE DECISION O F THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE C A SE OF KAUTILYA HOUSE BUILDING CO - OPERATIVE SOCIETY IN ITA NO.1334 TO 1337/BANG/2015 DATED 7/4/2016, W HICH HAD IN TURN FOLLOWED THE DECISION O F THE HON BLE HIGH COURT OF KARNATAKA IN THE C A SE OF KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO - OPERATIVE SOCIETY LTD., (SUPRA). 3.3 THE LD DR FOR REVENUE WAS HEARD IN SUPPORT OF THE GROUN D S RAISED (SUP R A). IT IS THE CONTENTION OF REVENUE THAT THE ACTIVITY MENTIONED IN THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH DEVELOPERS/CONTRACTORS CLEARLY INDICATE THAT THEY ARE COMPOSITE CONTRACTS FOR ACQUIRING LAND , F ORMING RESIDENTIAL LAYOUTS THEREON WITH ATTENDA NT CIVIL WORKS AND THEREFORE , SINCE IT AMOUNTS TO A COMPOSITE WORKS CONTRACT THE PROV I S I ONS OF SECTION 194C OF THE ACT ARE APPLICABLE . ACCORDING TO THE LD DR, THE JUDGMENT OF THE HON BLE KARNATAKA HIGH COURT RELIED ON BY THE LD CIT( A) (SUPRA) IN DISTINGUISHABLE AS IN THAT CASE, THE CONTRACT FOR PURCHASE OF SITES WAS ITA NO S . 2 19 - 2 2 5 /B/1 7 6 NOT A COMPOSITE CONTRACT. IT IS FURTHER SUBMITTED THAT THE TWO DECISIONS OF THE TRIBUNAL RELIED UPON BY THE LD CIT(A) HAVE NOT BEEN ACCEPTED BY THE DEPARTMENT AND THE SA ME ARE BEING CONTESTED IN FURTHER APPEAL BY REVENUE. 3.4 PER CONTRA, THE LD AR OF THE ASSESSEE SUPPORTED THE IMPUGNED ORDERS OF THE LD CIT(A), AND SUBMITTED THAT THERE IS NO ERROR THEREIN AS THE ISSUE IN DISPUTE IS COVERED BY THE ORDERS OF THE CO - ORDINATE BENCHES O F THIS TRIBUNAL WHICH WERE RELIED ON BY THE ASSESSEE I.E (I ) KAUTILYA HOUSE BUILDING CO - OPERATIVE SOCIETY LTD. (SUP R A) ; (II) RAILWAY HOUSE BUILDING C O - OPERATIVE SOCIETY LTD., IN ITA NOS.1339, 1340 & 1344/BANG/2015 AND 1343/BANG/2016 AND (III) TE LECOM EMPLOYEES CO - OPERATIVE HOUSING SOCIETY LTD., IN ITA NOS:2274 TO 2280/BANG/2016. IT WAS PRAYED THAT IN THE LIGHT OF THE ABOVE JUDICIAL PRECEDENTS AND FACTS O F THE CASE, THE IMPUGNED ORDER OF THE LD CIT(A) BE UPHELD. 3.5.1 WE HAVE HEARD T HE RIVAL C ONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONO UN CEM E N T S CITED. ON AN APPRAISAL OF THE MATERIAL BEFORE US , WE FIND THAT THERE IS NOTHING THEREIN THAT SHOWS THAT THE ASSESSEE IS LIABLE TO DEDUCT TAX AT S OURCE ON PAYMENTS MADE TO THE DEVELOPERS IN THE YEARS UNDER APPEAL. 3.5.2 NOW COMING TO THE MERITS OF THE ISSUE IN DISPUTE, IT IS SEEN THAT THE ASSESSEE SOCIETY HAS ENT E RED INTO AG RE EM E N T /MOU WITH DEVELOPER/CONTRACTOR M/S JAYASURYA DEVELOPERS, NO.2, 1 ST FLOOR, UTSAV, ITI LAYOUT, NEW BEL ROAD, BANGALORE - 560 054 DATED ITA NO S . 2 19 - 2 2 5 /B/1 7 7 11/4/2008 AND 30/4/2009 F ROM THE AFORESAID AGREEMENT /MOU IT IS SEEN THAT THE ASSESSEE SOCIETY HAS ENTRUSTED THE PROCUREMENT OF LAND AND DEVELOPMENT OF RESIDENTIAL LAYOUT THEREON WITH THE CONDITIONS TO EXECUTE CIVIL WORKS SUCH AS ROAD S, COMMON AMENITIES, DRAINAGE, ELECTRIFICATION, PLAN APPROVAL , CONVERSION OF LANDS FROM AGRICULTURE TO NON - A GRICULTURE STATUS, ETC., TO THE DEVELOPER. HOWEVER, THE FACT REMAINS THAT THE AGREEMENTS ESSENTIALLY AND BASICALLY RELATE TO THE PURCH A SE OF LAND DEVELOPMENT AND PURCHASE OF RESIDENTIAL SITES FR O M THE DEVEL OPER/CONTRACTORS. THE RELEVANT PORTION OF THE AG REEMENT OF THE ASSESSEE SOCIETY WITH M/S JAYASURYA DEVELOPERS I.E; DEVELOPMENTAL CONTRACTOR IS AS UNDER: - A. WHEREAS THE FIRST PARTY IS A HOUSING CO - OPERATIVE SOCIETY AND HAS BEEN ACTING UPON ITS OBJECTS BY FACILITATING ITS MEMBERS RESIDENTIAL SITES AND O THER SUPPORTS,' B. WHEREAS THE SECOND PARTY IS A LAND DEVELOPER, PROMOTER AND IN THE LINE OF BUSINESS OF FORMATION OF SITES, LAYOUT DEVELOPMENT, LAND PROCUREMENT AND OTHER LAND PROMOTION BUSINESS; AND C. WHEREAS THE FIRST PARTY APPROACHED THE SECOND PARTY TO PRODUCE CERTAIN LANDS AND DEVELOP THE SAME AND HAND OVER RESIDENTIAL SITES TO THE SOCIETY OR ITS MEMBERS AS THE SOCIETY INTENDED TO ALLOT SITES FOR ITS MEMBERS; AND ITA NO S . 2 19 - 2 2 5 /B/1 7 8 D. WHEREAS IN RESPECT OF THE OFFER AND ACCEPTANCE OF THE PARTIES, THE FIRST PARTY AND TH E SECOND PARTY, ON MUTUAL TERMS AND CONDITIONS, HAVE ENTERED INTO AN AGREEMENT ON 701 JUNE 2004, UHEREIN THE SECOND PARTY HAD AGREED TO PROCURE CERTAIN LANDS AND SUBSEQUENTLY DEVELOP AND WOULD HAND OVER THE PROPOSED DEVELOPED SITES/LAYOUT TO THE MEMBERS OF THE SOCIETY; AND E. WHEREAS THE FIRST PARTY, AS AND WHEN THE DEMAND RAISED FOR EXTRA SITES FOR ITS MEMBERS, REQUESTED THE SECOND PARTY TO DEVELOP MORE SITES AND N RESPECT OF THE SAME BOTH THE PARTIES HAVE ENTERED INTO FURTHER CONTINUATION AGREEMENTS ON 17 .11.2005 AND 05.3.2007, WHEREIN THE SECOND PARTY HAS AGREED TO DEVELOP APPROXIMATELY ABOUT 43 ACRES OF LAND IN AND AROUND YELAHANKA TOWN, BANGALORE NORTH TALUK, IN PHASEWISE MANNER; AND F. WHEREAS THE PARTIES HEREIN IN THE AFORESAID ORIGINAL AGREEMENT AND SUBSEQUENT CONTINUATION AGREEMENTS COVENANTED AND AGREED MUTUALLY EACH OTHER FOR CERTAIN TERMS AND CONDITIONS IN RESPECT OF RATE (CONSIDERATION), WORK SPECIFICATIONS, TIME BOUND, INCLUDING OTHER CONTRACTUAL OBLIGATIONS, ETC.; AND ITA NO S . 2 19 - 2 2 5 /B/1 7 9 G. WHEREAS AS PER THE AGRE ED TERMS AND CONDITIONS OF THE AFORESAID AGREEMENTS THE FIRST PARTY RELEASED/ ADVANCED CERTAIN AMOUNTS FOR PROCUREMENT OF LAND AND FOR DEVELOPMENT ACTIVITIES FROM TIME TO TIME AS AND WHEN THE SECOND PARTY APPROACHES AND REQUIRES FOR THE SAID PURPOSES. IN R ESPECT OF THE AMOUNTS ADVANCED BY THE FIRST PARTY THE SECOND PARTY HYPOTHECATED CERTAIN LANDS AGREED TO BE DEVELOPED BY WAY OF CREATING SIMPLE MORTGAGE BY DEPOSITING ORIGINAL TITLE DEEDS OF THE AFORESAID LANDS WITH THE FIRST PARTY, ON VARIOUS DATES, AND H. WHERE AS THE FIRST PARTY HAS BEEN OBSERVING THE DEVELOPMENT ACTIVITIES FROM TIME TO TIME AND THE SECOND PARTY ALSO BEEN ACTING UPON THE INSTRUCTIONS AND SPECIFICATIONS OF THE FIRST PARTY; AND I. WHERE THE PARTIES HEREIN DEEM FIT AND DESIRE THAT AS LOT OF MODIFICATIONS, AMENDMENTS AND RECTIFICATIONS NEED TO BE MADE IN RESPECT OF EARLIER COVENANTS BETWEEN THE PARTIES AS THE CIRCUMSTANCES FORCED TO ACT BY THE PARTIES ABOUT RATES, TIME BOUND, SPECIFICATIONS, AND AVAILABILITY ETC., THE PARTIES HEREIN DEEM FIT I T IS EXPEDIENT TO REDUCE ALL THE ITA NO S . 2 19 - 2 2 5 /B/1 7 10 AMENDMENTS AND CHANGES INTO WRITING BY EXECUTING THIS AGREEMENT. NOW THIS AGREEMENT WITNESS AS FOLLOWS: 2. THE SECOND PARTY HEREIN AGREE TO DEVELOP AND HAND OVER THE SITAL AREA IN PHASEWISE AS FOLLOWS AS ORALLY AGREED BY BOTH THE PARTIES IN SEVERAL MEETINGS ................. 3. THE SECOND PARTY HEREBY STATE AND CONFIRM THAT THEY ARE IN PROCESS OF PROCURING ANOTHER 3 ACRES OF LAND WHICH ARE ADJACENT TO THE LANDS BEING DEVELOPED IN PHASE - I AND PHASE - II AND FURTHER THEY HEREBY ASSURE AND AGREE THAT THEY SHALL HAND OVER SITAL AREA ABOUT 70,000 (SEVENTY THOUSAND) SQUARE FEET TO THE SECOND PARY AS THEY HAVE AGREED IN THEIR EARLIER AGREEMENTS. 4 . THE SECOND PARTY HEREBY AGREE AND ASSURE THE FIRST PARTY THAT THEY SHALL HA ND OVER APPROXIMATELY ABOUT 10,25,000(TEN LAKHS TWENTY JIVE THOUSAND) SQ. FEET OF SITAL AREA OUT OF ALL THE THREE PHASES INCLUDING THE 3 - 00 ACRES LAND AS AGREED IN CLAUSE 3 SUPRA. THE SECOND PARTY HEREBY FURTHER AGREE THAT THEY SHALL HAND OVER OR EXECUTE S ALE DEEDS IN RESPECT OF AFORESAID AVAILABLE ITA NO S . 2 19 - 2 2 5 /B/1 7 11 SITAL AREA TO THE MEMBERS OF THE SOCIETY/FIRST PARTY IN WHATEVER MANNER THE FIRST PARTY REQUIRES OR INSTRUCTS ABOUT MEASUREMENTS OF SITES. IN CASE ANY DISCREPANCY FIND IN ALLOTMENT OF SITES IN EACH PHASES AS MENT IONED IN CLAUSE 2 SUPRA, I.E. SHORTFALL OR EXCESS OF SQ. FEET ANY TECHNICAL REASONS THE SECOND PARTY HEREBY ASSURE THE FIRST PARTY THAT THEY SHALL HANDOVER OR DELIVER AN AGGREGATE OF 10,25,000 SQ. FEET OF SITAL AREA OUT OF ALL THREE PHASES, HERE OR THERE. 5. THE PARTIES HEREBY MUTUALLY DECIDED ABOUT THE RATE/ CONSIDERATIONS TO BE PAID BY THE FIRST PARTY TO THE SECOND PARTY IN RESPECT OF THE SITAL AREA AS FOLLOWS: I) A SUM OF RS. 3901 - (RUPEES THREE HUNDRED AND NINETY ONLY) PER SQ. FEET FOR THE SITES AVAILAB LE IN THE PHASE - I (PHASE ONE) II) A SUM OF RS. 640/ - (RUPEES SIX HUNDRED AND FORTY ONLY) PER SQ. FEET FOR THE SITES AVAILABLE IN THE PHASE - II (PHASE TWO) III) A SUM OF RS. 7901 - (RUPEES SEVEN HUNDRED AND NINETY ONLY) PER SQ. FEET FOR THE SITES AVAILABLE IN THE PHASE - III (PHASE THREE) IV) THE PARTIES HEREBY STATE AND COVENANT THAT THE RATE FOR THE ADDITIONAL LAND AGREED TO BE ITA NO S . 2 19 - 2 2 5 /B/1 7 12 DEVELOPED AS MENTIONED IN CLAUSE AR OF 3 SUPRA I.E. FOR 3 ACRES OF LAND (70,000 SFT), ADJACENT TO THE PHASE - I AND PHASE - III, S HALL BE RS.3901 - (RUPEES THREE HUNDRED AND NINETY ONLY). THE PARTIES HEREBY STATE AND CONFIRM THAT THE AFORESAID RATES ARE EXCLUSIVE OF CHARGES AND OTHER STATUTORY DEPOSITS TO BE PAID TO B. W.S.S.B AND BESCOM TOWARDS PROVIDING WATER AND ELECTRICITY SUPPLY T O THE LAYOUT. 6. THE AFORESAID RATES/ CONSIDERATION IS ESCALATED BY MUTUAL AGREEMENTS AND CONSENT OF BOTH THE PARTIES HEREIN AS THE LAND RATES, LABOUR CHARGES, COST OF DEVELOPMENT MATERIALS ARE DRASTICALLY RAISED FOR LAST SEVERAL YEARS, SECONDLY THE ZONAL REGULATIONS AND OTHER APPROVALS WERE TO BE OBTAINED FROM BANGALORE DEVELOPMENT AUTHORITY INSTEAD OF YELAHANKA CMC. THE SAID REASONS HAVE BEEN BROUGHT TO THE NOTICE OF THE FIRST PARTY BY THE SECOND PARTY FROM TIME TO TIME. THE FIRST PARTY BROUGHT THESE FACT S BEFORE THE OFFICE BEARERS OF THE SOCIETY, TIME AND AGAIN, AND AFTER CONSIDERING THE FACTS AND INEVITABLE CIRCUMSTANCES THE FIRST PARTY HAS AGREED TO PAY THE AFORESAID ESCALATED RATE TO THE SECOND PARTY. ITA NO S . 2 19 - 2 2 5 /B/1 7 13 7. THE SECOND PARTY HEREBY ACKNOWLEDGES THAT THEY H AVE RECEIVED AN AGGREGATE SUM OF RS. 36,65,97,795/ - (RUPEES THIRTY SIX CRORES SIXTY FIVE LAKHS NINETY SEVEN THOUSAND SEVEN HUNDRED AND NINETY FIVE ONLY) AS AT 311312008 ON VARIOUS DATES AS AGAINST THE AFORESAID THREE AGREEMENTS. IN ORDER TO SECURE THE AMOU NTS ADVANCED BY THE FIRST PARTY THE SECOND PART HAS HYPOTHECATED CERTAIN LANDS SITUATED IN VARIOUS SURVEY NUMBERS BY EXECUTING EQUITABLE MORTGAGE DEEDS. 3.5. 4 ON APPEAL, THE LD CIT(A) ON PERUSAL OF THE AFORESAID CL A USES OF THE AGREEMENT HAS ARRIVED AT THE CONCLUSION THAT THE PAYMENTS FOR THE PURCHASE OF THE SITES WAS CALCULATED ON SQ. FT. AREA OF THE PROPERTY AND THE AMOUNT WAS PAID FOR THE PURCHASES OF COMPLETED PROPERTY AND NO T FOR DEVELOPMENT WORK CARRIED OUT. THE LD CIT(A) FOUND THAT THE AGREEMENT S WERE ONLY FOR PURCHASE OF SITES AND DOES NOT INVOLVE ANY WORKS CONTRACT . IN OUR VIEW, THE AFORESAID CONCLUSION/FINDING OF THE LD CIT(A) CANNOT BE FAULTED AND THE SAME IS A CORRECT READING OF THE SCOPE OF THE AGREEMENTS ; WHICH HAS TO BE TREATED AS A WHOLE AND NOT IN PIECE MEAL MANNER. THE MERE FACT THAT THE CONTRACTOR /DEVELOPER WERE REQUIRED TO LAYOUT ROADS AND UNDERTAKE OTHER ACTIVITIES BEFORE THE DELIVERY OF T HE COMPLETED SITES CANNOT BE EITHER DETERMINATIVE OF THE FA CTS OR NEED TO MEAN THAT THE AGREEMENTS ENTERED INTO BY THE ASSESSEE SOCIETY IS A COMPOSITE CONTRACT AND AMOUNTS TO A WORKS CONTRACT. ITA NO S . 2 19 - 2 2 5 /B/1 7 14 TH US , I N OUR CONSIDERED OPINION, THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE D ECISION S OF THE HON BLE KARNATAKA H IGH COURT IN THE CASE OF KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING C O - OPERATIVE SO C I E TY LTD., (SUPRA); THE RELEVANT PORTION OF WHICH JUDGMENT IS EXTRACTED HEREUNDER: - THE SHORT THAT FELL FOR THE CONSIDERATION FOR THE ASSESSING OFFICER, THE COMMISSIONER OF INCOME - TAX AND THE TRIBUNAL WAS WHETHER IF THE ASSESSEE HAS AGREED TO PURCHASE THE SITES FROM A VENDOR IF ANY SALE CONSIDERATION IS PAID ON INSTALMENT BASIS, THE ASS ESSEE IS REQUIRED TO DEDUCT THE TAX AT SOURCE OR NOT. WHEN THE ASSESSEE IS ONLY A PURCHASER, IF ANY ADVANCE SALE CONSIDERATION IS PAID, THE ASSESSEE HAS NO BUSINESS TO DEDUCT THE TAX AT SOURCE AS IT IS FOR THE SELLER OF THE SITES TO PAY THE CAPITAL GAINS D EPENDING UPON THE TAX PAYABLE BY HIM. 3.5.5 IN THE AFORESAID CASE DECIDED BY THE HON BLE KARNATAKA HIGH COURT (SUPRA), THE CO - ORDINATE BENCH OF THIS TRIBUNAL HAD RENDERED THE FOLLOWING FINDING: - .THE AGREEMENT BETWEEN SH. LAKSHMAN, AND KARNATAKA S TATE .JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO - OPERATIVE SOCIETY BEGINS TO OPERATE ONLY AFTER THE LAYOUT IS FORMED AND SO CAN NEVER BE CONSTRUED ITA NO S . 2 19 - 2 2 5 /B/1 7 15 AS AN AGREEMENT IN THE NATURE OF WORKS CONTRACT. A CONTRACTOR IS ONE WHO I UNDERTAKES TO DO A PARTICUL AR WORK - FOR A PRICE. NO SUCH CONTRACT IS ENVISAGED IN THIS AGREEMENT. THIS AGREEMENT ENVISAGES PURCHASE OF SPECIFIED INTERMEDIATE SITES AT A PRICE AFTER SRI LAKSHMAN COMPLETES THE JOB OF FORMATION OF A LAYOUT EITHER INFTI1 OR IN PART. WE ACCORDINGLY HOLD T HAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX IN THIS REGARD. 3.5.6 WE FIND THAT REVENUE S CONTENTION THAT THE AFORESAID JUDGMENT OF THE HON BLE KARNATAKA HIGH COURT IN THE C A SE OF KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO - OPERATIVE SOCIETY LTD., (SUPRA) IS DISTINGUISHABLE FROM THE CASE ON HAND HAS ALSO BEEN CONSIDERED ON SIMILAR FACT SITUATION, BY CO - ORDINATE BENCHES OF THIS TRIBUNAL IN THE CASE OF KARNATAKA STATE CO - OPERATIVE SUBHADRANNA HOUSING FEDERATION L T D. (ITA NO S.1301, 1307 TO 1313/BANG/2015), RAILWAY HOUSE BUILDING CO - OPERATIVE SOCIETY (ITA NOS.1139, 1140 & 1344/BANG/2015 & 1343/BANG/2014) , AND IN TH E CASE OF KAUTILYA HOUSE BUILDING CO - OPERATIVE SOCIETY LTD., (ITA NOS. 1324 TO 1337/BANG/2015 DATED 7/4/2016 , T H E LD CIT(A ) HAS OBSERVED THAT IN THESE CASES (SUP R A) ALSO, THE CONTENTS OF THE AGREEMENTS WERE SIMILAR ITA NO S . 2 19 - 2 2 5 /B/1 7 16 TO THOSE OF THE ASSESEE IN THE CASE ON HAND AND THE VARIOUS CO - ORDINATE BENCHES O F THIS TRIBUNAL AFTER EXAMINING THE SAME HAS APPLIED THE RATIO OF THE J UDGMENT OF THE HON BLE KARNATAKA HIGH COURT IN TH E CASE OF KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING C O - OPERATIVE SOCIETY L T D. , (SUP R A) AND HA VE HELD THAT THERE WAS NO REQUIREMENT FOR DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. RESP ECTFULLY FOLLOWING THE RATIO OF THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF KARNATAKA STATE JUDICIAL DEPARTMENTAL EMPLOYEES HOUSE BUILDING SOCIETY L T D., (SUP R A) AND OF THE CO - ORDINATE BENCHES OF THIS TRIBUNAL IN THE CASES OF KARNATAKA STATE CO - OPERATIVE SUBHADRA NNA HOUSING FEDERATION LTD., (SUP R A), RAILWAY HOUSE BUILDING C O - OPERATIVE SOCIETY L T D, (SUP R A) , KAUTILYA HOUSE BUILDING CO - OPERATIVE SOCIETY L T D., (SUP R A) , KARNATAKA LEGISLATURE SECRETARIAT EMPLOYEES CO - OPERATIVE E MPLOYEES CO - OPERATIVE SOCIETY LTD., (SUPRA) AND IN THE CASE OF TELECOM EMPLOYEES CO - OPERATIVE SOCIETY LTD., (SUPRA) WE FIND NO REASON TO INTERFERE WITH OR DEVIATE FROM THE VIEW TAKEN IN THESE DECISIONS WHICH HAVE BEEN RENDERED ON SIMILAR FACTS AND ISSUES A S IN THE CASE ON HAND. WE, THEREFORE, UPHOLD THE IMPUGNED ORDERS OF THE LD CIT(A) DELETING THE DEMANDS RAISED BY THE AO U/S 201(1) AND 201(1A) OF THE ACT. CONSEQUENTLY , THE GROUNDS RAISED BY THE REVENUE (SUPRA) , BEING DEVOID O F MERITS , ARE DISMISSED. 4 . IN THE RESULT, REVENUE S APPEAL S FOR ASST. YEAR S 200 8 - 0 9 TO 2014 - 15 ARE DISMISSED. ITA NO S . 2 19 - 2 2 5 /B/1 7 17 ORDER PRONOUNCED IN THE OPEN COURT ON 6TH DECEMBER , 201 7 . SD/ - SD/ - (LALIET KUMAR ) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED : 6 / 1 2 /2017 * REDDY GP/ VMS C OPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETARY , ITAT, BANGALORE.