Income Tax Officer (TDS), Ward - 2(1), Bangalore V. M/s. Karnataka Legislature Secretariat Employees' Housing Cooperative Society Ltd., Bangalore

ITA 246/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7503 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 06-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L V BHASKAR REDDY
• Assessee Lawyers: G VENKTESH
• Keywords: Tax effect
• Section: 133(6); 194C; 201(1); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N.V VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NOS.246 TO 259/BANG/2017 (ASST. YEAR 2008-09 & 2014-15) THE INCOME-TAX OFFICER, TDS WARD-2(1), BANGALORE. . APPELLANT VS. M/S KARNATAKA LEGISLATURE SECRETARIAT EMPLOYEES HOUSING CO-OPERATIVE SOCIETY LTD., ROOM NO.216/A, 2 ND FLOOR, VIDHANA SOUDHA, AMBEDKAR VEEDHI, BENGALURU. . RESPONDENT APPELLANT BY : SHRI L.V BHASKAR REDDY, ADDL . CIT RESPONDENT BY : SHRI G VENKTESH, ADVOCATE DATE OF HEARING : 06-10-2017 DATE OF PRONOUNCEMENT : 11-10-2017 O R D E R PER BENCH : THESE ARE A BUNCH OF FOURTEEN APPEALS BY THE REVEN UE, DIRECTED AGAINST THE ORDER COMMISSIONER OF INCOME- TAX (APPEALS) 13, BANGALORE DATED 28/11/2016 FOR THE ASSESSMENT Y EARS 2008-09 TO 2014-15. SINCE COMMON ISSUES ARE INVOLVED, THESE A PPEALS WERE ITA NOS.246 - 25 9/B/17 2 HEARD TOGETHER AND ARE BEING DISPOSED OFF TOGETHER BY WAY OF THIS ORDER. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UND ER:- 2.1 THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN THE ACTIVITY OF IDENTIFYING SUITABLE LANDS AND FORMING A RESIDENTIA L LAYOUT FOR ALLOTMENT OF RESIDENTIAL SITES TO ITS MEMBERS AND A SSOCIATED MEMBERS. THE ASSESSING OFFICER (AO) CALLED FOR INFORMATION U/S 133(6) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAININ G TO THE DETAILS OF PAYMENTS MADE TO DEVELOPERS/CONTRACTORS AND TAX DED UCTED THEREON. FROM THE DETAILS FILED, THE AO NOTICED THAT THE ASS ESSEE HAD ENTERED INTO CERTAIN AGREEMENTS AND MOUS, WITH THE DEVELO PER/CONTRACTOR M/S JAYA SURYA DEVELOPERS, DOMINION REALITY PVT. LT D., AND NANDI BUILDINGS INDIA PVT. LTD., FOR CARRYING OUT THE ABO VE ACTIVITIES AND HAD FAILED TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE TO THESE PARTIES WITH WHOM IT HAD ENTERED INTO AGREEMENTS FOR THE AC QUISITION OF LAND AND FORMATION OF RESIDENTIAL LAYOUT FOR THE BENEFIT OF ITS MEMBERS (REQUIRING THE CARRYING OUT OF CIVIL WORK SUCH AS L AYING OF ROADS, DRAINAGE, ELECTRIFICATION, ETC.); WHICH WERE IN THE NATURE OF COMPOSITE WORK CONTRACTS. THE AO, INTER ALIA, NOTICED THAT T HE AFORESAID LAYOUT IS TO BE DEVELOPED AS PER THE ASSESSEES SPECIFICATION S AND THE WORDS PROCUREMENT OF LAND MEANT THAT THE DEVELOPER DOES N OT OWN ANY LAND AS ON THE DATE OF AGREEMENT. IN THAT VIEW OF THE M ATTER, THE AO HELD THAT THE AFORESAID WORK, CARRIED OUT BY THE DEVELOP ER/CONTRACTOR ON BEHALF OF THE ASSESSEE, IS THE NATURE OF WORKS CONT RACT AND THEREFORE THE PROVISIONS OF SEC. 194C OF THE ACT WAS ATTRACTE D. SINCE THE ITA NOS.246 - 25 9/B/17 3 ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE ON PAYM ENTS ITS MADE TO DEVELOPERS/CONTRACTORS 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 INTEREST U/S 201(1A) O F THE ACT. THE EXPLANATIONS PUT FORTH BY THE ASSESSEE DID NOT FI ND FAVOUR WITH THE AO AND HE PASSED SEPARATE ORDERS U/S 201(1) AND 201 (1A) OF THE ACT FOR ASST. YEARS 2008-09 TO 2014-15 ALL DATED 28/2/2 014 HOLDING THE ASSESSEE TO BE AN ASSESSEE IN DEFAULT FOR FAILURE T O DEDUCT TAX AT SOURCE ON PAYMENTS MADE BY IT TO DEVELOPERS/CONTRACTORS AS REQUIRED U/S 194COF THE ACT AS IT WAS IN THE NATURE OF WORKS CON TRACT. 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 28/11/ 2016 HOLDING THAT THE ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT S OURCE ON THE PAYMENTS IT MADE TO DEVELOPERS/CONTRACTS AS THE PRO VISIONS OF SEC. 194C OF THE ACT WERE NOT ATTRACTED IN THE CASE ON H AND.. 3.1 REVENUE, BEING AGGRIEVED BY THE ORDERS OF THE C IT(A)-13, BANGALORE DATED 28/11/2016 FOR ASST. YEARS 2008-09 TO 2014-15, HAS FILED THESE APPEALS BEFORE THE TRIBUNAL RAISING THE FOLLOWING COMMON GROUNDS FOR THE AFORESAID ASST. YEARS. 1. THE ORDER OF CIT(A) IS OPPOSED TO THE FACTS AND NATURE OF THE CASE ON HAND. ITA NOS.246 - 25 9/B/17 4 2. THE ID. CIT (A) ERRED IN HOLDING THAT THE ASSESS EE 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 FAC T 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 S ECTION 194C. 5. THE ID. CIT (A) OUGHT TO HAVE CONSIDERED THE FAC T THAT THE AGREEMENT ENTERED INTO BY THE ASSESSEE WIT H THE DEVELOPER ARE IN THE NATURE OF COMPOSITE CONTRACTS FOR WORKS FOR WHICH PROVISIONS OF SECTION 194C IS CLEAR LY 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 HO USE BUILDING CO-OPERATIVE SOCIETY LIMITED IN ITA NO. 13 24 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 PRINC IPLE. ITA NOS.246 - 25 9/B/17 5 7. THE APPEALS HAVE BEEN FILED FOR ALL THE ASSESSME NT YEARS INCLUDING THE ASSESSMENT YEARS WHERE THE TAX EFFECT IS BELOW THE PRESCRIBED MINIMUM SINCE A COMPOSITE O RDER HAS BEEN PASSED BY THE CIT(A) AND THEREFORE PARA 5 OF THE CBDT'S CIRCULAR NO. 21 OF 2015 DATED 10.12.2015 IS APPLICABLE IN THIS CASE. FOR THESE AND OTHER GROUNDS THAT MAY BE RAISED DURING THE COURSE OF APPEAL AND ACTUAL HEARI NG IT IS PRAYED THAT 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 ASI DE AND CANCELLED. 3.2 THE GROUNDS RAISED (SUPRA) RELATES TO THE SINGL E ISSUE PERTAINING TO THE DELETION OF THE DEMANDS RAISED U/S 201(1) AN D 201(1A) OF THE ACT BY THE LD CIT(A) BY FOLLOWING THE DECISION OF T HE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF KAUTILYA HOUS E BUILDING CO- OPERATIVE SOCIETY IN ITA NO.1334 TO 1337/BANG/2015 DATED 7/4/2016, WHICH HAD IN TURN FOLLOWED THE DECISION OF THE HON BLE HIGH COURT OF KARNATAKA IN THE CASE OF KARNATAKA STATE JUDICIAL D EPARTMENT EMPLOYEES HOUSE BUILDING CO-OPERATIVE SOCIETY LTD. , (SUPRA). 3.3 THE LD DR FOR REVENUE WAS HEARD IN SUPPORT OF T HE GROUNDS RAISED (SUPRA). IT IS THE CONTENTION OF REVENUE TH AT THE ACTIVITY MENTIONED IN THE AGREEMENTS ENTERED INTO BY THE ASS ESSEE WITH DEVELOPERS/CONTRACTORS CLEARLY INDICATE THAT THEY A RE COMPOSITE ITA NOS.246 - 25 9/B/17 6 CONTRACTS FOR ACQUIRING LAND, FORMING RESIDENTIAL L AYOUTS THEREON WITH ATTENDANT CIVIL WORKS AND THEREFORE, SINCE IT AMOUN TS TO A COMPOSITE WORKS CONTRACT THE PROVISIONS OF SECTION 194C OF TH E ACT WAS APPLICABLE. ACCORDING TO THE LD DR, THE JUDGMENT O F THE HONBLE KARNATAKA HIGH COURT RELIED ON BY THE LD CIT(A) (SU PRA) IN DISTINGUISHABLE AS IN THAT CASE, THE CONTRACT FOR P URCHASE OF SITES WAS NOT A COMPOSITE CONTRACT. IT IS FURTHER SUBMITTED THAT THE TWO DECISIONS OF THE TRIBUNAL RELIED UPON BY THE LD CIT(A) HAVE N OT BEEN ACCEPTED BY THE DEPARTMENT AND THE SAME 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 I S NO ERROR THEREIN AS THE ISSUE IN DISPUTE IS COVERED BY THE ORDERS OF TH E CO-ORDINATE BENCHES OF THIS TRIBUNAL WHICH WERE RELIED ON BY TH E ASSESSEE I.E (I) KAUTILYA HOUSE BUILDING CO-OPERATIVE SOCIETY LTD. ( SUPRA); (II) RAILWAY HOUSE BUILDING CO-OPERATIVE SOCIETY LTD., I N ITA NOS.1339, 1340 & 1344/BANG/2015 AND 1343/BANG/2016 AND (III) TELECOM 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 OF THE CASE, THE IMPUGNED ORDE R OF THE LD CIT(A) BE UPHELD. 3.5.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED. ON AN APPRAISAL OF THE MATER IAL BEFORE US, WE FIND THAT THERE IS NOTHING THEREIN THAT SHOWS THAT THE ASSESSEE IS LIABLE ITA NOS.246 - 25 9/B/17 7 TO DEDUCT TAX AT SOURCE ON PAYMENTS MADE TO THE DEV ELOPERS IN THE YEARS UNDER APPEAL. 3.5.2 NOW COMING TO THE MERITS OF THE ISSUE IN DIS PUTE, IT IS SEEN THAT THE ASSESSEE SOCIETY HAS ENTERED INTO VARIOUS AGREE MENTS/MOUS WITH VARIOUS DEVELOPERS/CONTRACTORS ON VARIOUS DATES AS PER THE DETAILS EXTRACTED HEREUNDER:- 3.5.3 FROM THE AFORESAID AGREEMENTS/MOUS IT IS SEE N THAT THE ASSESSEE SOCIETY HAS ENTRUSTED THE PROCUREMENT OF L AND AND DEVELOPMENT OF RESIDENTIAL LAYOUT THEREON WITH THE CONDITIONS TO EXECUTE CIVIL WORKS SUCH AS ROAD CUTTING, DRAINAGE, ELECTRIFICATION, PLAN APPROVAL, CONVERSION OF LANDS FROM AGRICULTURE TO NON-AGRICULTURE STATUS, ETC., TO THE DEVELOPER. HOWEVER, THE FACT REMAINS THAT THE AGREEMENTS ESSENTIALLY AND BASICALLY RELATE TO THE PURCHASE OF LAND DEVELOPMENT AND PURCHASE OF RESIDENTIAL SITES FROM THE DEVELOPER/CONTRACTORS. THE RELEVANT PORTION OF THE AGREEMENT OF THE ASSESSEE SOCIETY WITH M/S JAYASURYA DEVELOPERS PVT. LTD., I.E; DEVELOPMENTAL CONTRACTOR IS AS UNDER:- 1. WHEREAS THE FIRST PARTY, INTENDING TO FORM A RESIDENTIAL LAYOUT IN AND AROUND BANGLORE TO CATER ITA NOS.246 - 25 9/B/17 8 THE NEED OF ITS MEMBERS, WAS ON THE LOOK OUT FOR A SUITABLE LAND DEVELOPERS WHO COULD OFFER THE LANDS IN AND AROUND BANGALORE CITY AND FORM THE RESIDENTIAL LAYOUT ACCORDING TO ITS SPECIFICATIONS AND AFTER OBTAINING APPROVALS FROM THE COMPETENT AUTHORITIES. 2. WHEREAS THE SECOND PARTY WHO IS THE DEVELOPERS OF AGRICULTURAL LANDS SIGNIFIED IT'S INTENTION TO F ORM A RESIDENTIAL LAYOUT TO THE FIRST PARTY IN THE LAND SITUATED AT SURVEY NO.4 AND 8 OF GASTHI KEMPANAHALLI, YALAHANKA HOBLI, BANGALORE NORTH TALUK MOREFULLY DESCRIBED IN THE SCHEDULE HEREUNDER AND HEREINAFTER CALLED AS 'SCHEDULE LANDS', TO WHIC H THE SECOND PARTY IS THE AGREEMENT HOLDER AND AUTHORIZED PERSON TO FORM THE RESIDENTIAL LAYOUT IN THE SCHEDULE PROPERTY WHICH COMES UNDER THE JURISDICTION OF YELAHANKA CMC. 3. WHEREAS THE SECOND PARTY WHO IS THE AGREEMENT HOLDER OF THE SCHEDULE LANDS OFFERED TO FORM THE RESIDENTIAL LAYOUT IN THE SCHEDULE LANDS TO THE FIR ST PARTY AFTER OBTAINING THE REQUISITE APPROVALS FROM VARIOUS AUTHORITIES FOR IT AND AFTER COMPLETING ALL THE REQUISITE INFRASTRUCTURE WORKS, SUCH AS ROADS WITH ASPHALT, ELECTRIC LINES, DRAINAGE, WATER LINES, SEWERAGE CONNECTION IN ACCORDANCE WITH THE BDA ITA NOS.246 - 25 9/B/17 9 NORMS BEFORE THE SITES COULD BE UTILIZED FOR ALLOTM ENT TO THE MEMBERS OF FIRST PARTY. 4. THE FIRST PARTY ACCEPTING THE OFFER MADE BY THE SECOND PARTY AGREED TO BUY THE DEVELOPED SITES WITH ALL THE FACILITIES CITED ABOVE TO BE FORMED IN THE SCHEDULE LANDS FROM THE SECOND PARTY SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS ACCORDINGLY ENTERED INTO THIS AGREEMENT WITENESSING AS FOLLOWS: (A) THE PARTIES HEREBY AGREE THAT THE SECOND PARTY SHALL PURCHASE AND REGISTER THE SCHEDULE PROPERTY IN ITS NAME IN PHASED MANNER OUT OF THE PAYMENT MADE BY THE FIRST PARTY AS ADVANCE AND THEN THE SECOND PARTY SHALL DEPOSIT ORIGINAL TITLE DEEDS WITH THE FIRST PARTY TOWARDS SECURITY FOR THE PAYMENT MADE BY THE FIRST PARTY TO THE SECOND PARTY FOR SUCCESSFUL COMPLETION OF THE PROJECT IN ACCORDANCE WITH THE RECITALS OF THIS AGREEMENT. (B) THE PARTIES HEREBY AGREE THAT AFTER GETTING THE LANDS REGISTERED IN FAVOUR OF SECOND PARTY, THE SECOND PARTY SHALL ARRANGE TO GET THE SCHEDULE LANDS FIT FOR THE USE OF RESIDENTIAL PURPOSE BY PAYING THE BETTERMENT CHARGES PAYABLE TO THE CMC, ITA NOS.246 - 25 9/B/17 10 YELAHANKA OR OTHER COMPETENT AUTHORITIES , AS THE CASE MAY BE. (C) THE PARTIES HEREBY AGREE THAT THE SECOND PARTY AFTER GETTING THE LAND TO THE RESIDENTIAL USE, PREPARE THE LAYOUT PLAN AS PER THE SPECIFICATION OF THE FIRST PARTY AND AFTER OBTAINING ITS CONSENT FOR THE PLAN, OBTAIN NECESSARY APPROVAL FORM THE CMC, YELAHANKA FOR THE SAID LAYOUT PLAN AND ALSO FOR FORMATION OF THE LAYOUT AS PER THE SPECIFICATION OF THE CMC YELAHANKA AND THE RULES IN FORCE MEETING ALL THE EXPENDITURE INCLUDING THE PAYMENT OF FEES, BETTERMENT CHARGES, CESS ETC. REQUIRED TO BE MADE FOR THAT PURPOSE OUT OF THE AGREED AMOUNT PAID BY THE FIRST PARTY UNDER THE TERMS OF THIS AGREEMENT. (D) THE PARTIES HEREBY AGREE THAT THE SECOND PARTY SHALL OBTAIN ALL REQUISITE SANCTIONS AND APPROVALS FOR THE SAID LAYOUT FROM THE COMPETENT AUTHORITIES SUCH AS THE CMC, YELAHANKA KPTCL, BWSSB AND OTHER COMPETENT AUTHORITIES IN FAVOUR OF THE FIRST PARTY BY PAYING ALL THE FEE, CESS, DEPOSITS BY ITSELF OUT OF THE AGREED AMOUNT. ITA NOS.246 - 25 9/B/17 11 (E) THE SECOND PARTY SHALL FORM THE RESIDENTIAL LAY-OUT AFTER PAYING THE BETTERMENT CHA-GES TO C.M.0 YELAHANKA AND DEVELOP THE LAYOUT ON PAR WITH THE BDA LAYOUT BY PROVIDING ALL FACILITIES AS PROVIDED BY BDA IN ITS LAYOUT. (F) THE PARTIES HEREBY AGREE THAT AFTER COMPLYING WITH ALL THE ABOVE REQUIREMENTS AND COMPLETING THE SAID WORKS, THE SECOND PARTY SHALL TAKE UP THE DEVELOPMENTAL WORKS OF THE LAYOUT INCLUDING THE FOLLOWING ITEMS OF WORK AS PER THE SPECIFICATION GIVEN BY THE FIRST PARTY: (1) FORMATION OF ROADS INCLUDING ASPHALTING AS PER THE APPROVED PLAN WITH WATER BOUND FINISHING AND MACADAM ROADS. (2) FORMATION OF MAIN ROAD, OF 40' WIDE AND ALL CONNECTING CROSS ROADS OF 30' WIDE AND FORMATION OF AN OUTER RING ROAD CONNECTING ALL THE ROADS OF THE LAYOUT. (3) BOX TYPE DRAINAGE INCLUDING STORM WATER DRAIN WITH COVER AND CONCRETE CULVERTS WITH 'L' SHAPED CEMENT SLABS AT THE CROSS AND MAIN ROADS. ITA NOS.246 - 25 9/B/17 12 (4) PROVISIONS FOR WATER SUPPLY INCLUDING SINKING OF NECESSARY NUMBER OF BOREWELLS TO ENSURE THE SATISFACTORY SUPPLY OF THE REQUISITE REQUIREMENT OF WATER AND LAYING OF ALL DISTRIBUTION LINES WITH C.I. PIPES AND CONTROL VALVES WITH COVERS ALONG THE MAIN AND CROSS ROADS IN THE LAYOUT AS PER THE PLAN. (5) UNDER-GROUND DRAINAGE FACILITY WITH REQUISITE NUMBER OF MANHOLES AND SEPTIC TANKS FOR DISPOSAL OF SEWAGE AS PER THE BWSSB NORMS. (6) ELECTRICITY WORKS INCLUDING ERECTION OF CEMENT POLES, FIXING OF STREET LIGHTS ON ROADS AND INSTALLATION OF TRANSFORMERS AS PER THE KPTCL NORMS. (7) CONSTRUCTION OF OVERHEAD TANK AND SUMP REQUISITE CAPACITY TO FULFILL THE REQUIREMENT OF WATER FOR THE LAYOUT. (8) DEMARCATION OF SITES AS PER THE SPECIFICATIONS OF THE FIRST PARTY AND AS PER THE APPROVED PLAN AND PUTTING THE SITE NOS. IN EACH SITE. (9) INSTALLATION OF LAYOUT KEY PLAN BOARD AND DIRECTION BOARDS INDICATING THE CROSS ROADS ITA NOS.246 - 25 9/B/17 13 AND MAIN ROADS ALONG WITH THE SITE NUMBERS COMING IN THE RESPECTIVE ROADS AS PER THE APPROVED PLAN. (10) PLANTING OF ROAD - SIDE TREES. (11) PUTTING THE SOCIETY'S NAME BOARD IN THE LAYOUT (12) FENCING THE PARK AND CA SITES. 13) RELEASE OF SITES FORM THE COMPETENT AUTHORITIES, IF NECESSARY. (14) FORMATION OF ROAD FROM THE MAIN ROAD ( JAKKUR TO YELAHANKA ROAD ) TO THE SCHEDULE PROPERTY IN ACCORDANCE WITH THE GOVERNMENT ORDER NO. LND (NA) CR 196- 97 DATED 22-6-96 UNDER SECTION 71 K.L.R ISSUED TO LAND OWNERS BY THE SPECIAL DEPUTY COMMISSIONER ( REVENUE), BANGALORE DISTRICT PASSING THROUGH THE BWSSB WATER TREATMENT PLANT AND CONNECTING INTO THE LAYOUT. 3.5.4 AS OBSERVED BY THE AO, THE AGREEMENT/MOUS E NTERED INTO BY THE ASSESSEE SOCIETY WITH THE OTHER DEVELOPERS/CONT RACTORS ALSO CONTAIN CLAUSES SIMILAR TO THE ABOVE. ON APPEAL, THE LD CI T(A) ON PERUSAL OF THE AFORESAID CLAUSES OF THE AGREEMENTS HAS ARRIVED AT THE CONCLUSION THAT THE PAYMENTS FOR THE PURCHASE OF THE SITES WAS CALCULATED ON SQ. FT. ITA NOS.246 - 25 9/B/17 14 AREA OF THE PROPERTY AND THE AMOUNT WAS PAID FOR TH E PURCHASES OF COMPLETED PROPERTY AND NOT FOR DEVELOPMENT WORK CAR RIED OUT. THE LD CIT(A) FOUND THAT THE AGREEMENTS WERE ONLY FOR PURC HASE OF SITES AND DOES NOT INVOLVE ANY WORKS CONTRACT. IN OUR VIEW , THE AFORESAID CONCLUSION/FINDING OF THE LD CIT(A) CANNOT BE FAULT ED AND THE SAME IS A CORRECT READING OF THE SCOPE OF THE AGREEMENTS; W HICH HAS TO BE TREATED AS A WHOLE AND NOT IN PIECE MEAL MANNER. T HE MERE FACT THAT THE CONTRACTORS/DEVELOPERS WERE REQUIRED TO LAYOUT ROADS AND UNDERTAKE OTHER ACTIVITIES BEFORE THE DELIVERY OF T HE COMPLETED SITES CANNOT BE EITHER DETERMINATIVE OF THE FACTS OR NEED TO MEAN THAT THE AGREEMENTS ENTERED INTO BY THE ASSESSEE SOCIETY IS A COMPOSITE CONTRACT AND AMOUNTS TO A WORKS CONTRACT. THUS, IN OUR CONSIDERED OPINION, THE CASE OF THE ASSESSEE IS SQUARELY COVER ED BY THE DECISIONS OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO-OPE RATIVE SOCIETY LTD., (SUPRA); THE RELEVANT PORTION OF WHICH JUDGME NT IS EXTRACTED HEREUNDER:- THE SHORT THAT FELL FOR THE CONSIDERATION FOR THE ASSESSING OFFICER, THE COMMISSIONER OF INCOME-TAX A ND 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 ASSE SSEE IS REQUIRED TO DEDUCT THE TAX AT SOURCE OR NOT. WHEN T HE ASSESSEE IS ONLY A PURCHASER, IF ANY ADVANCE SALE CONSIDERATION IS PAID, THE ASSESSEE HAS NO BUSINESS TO ITA NOS.246 - 25 9/B/17 15 DEDUCT THE TAX AT SOURCE AS IT IS FOR THE SELLER OF THE SITES TO PAY THE CAPITAL GAINS DEPENDING UPON THE TAX PAY ABLE BY HIM. 3.5.5 IN THE AFORESAID CASE DECIDED BY THE HONBLE KARNATAKA HIGH COURT (SUPRA), THE CO-ORDINATE BENCH OF THIS TRIBUN AL HAD RENDERED THE FOLLOWING FINDING:- .THE AGREEMENT BETWEEN SH. LAKSHMAN, AND KARNATAKA STATE .JUDICIAL DEPARTMENT EMPLOYEES HOUS E BUILDING CO-OPERATIVE SOCIETY BEGINS TO OPERATE ONL Y AFTER THE LAYOUT IS FORMED AND SO CAN NEVER BE CONS TRUED 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 L AKSHMAN COMPLETES THE JOB OF FORMATION OF A LAYOUT EITHER I NFTI1 OR IN PART. WE ACCORDINGLY HOLD THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX IN THIS REGARD. 3.5.6 WE FIND THAT REVENUES CONTENTION THAT THE AF ORESAID JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO-OPE RATIVE SOCIETY LTD., (SUPRA) IS DISTINGUISHABLE FROM THE CASE ON H AND HAS ALSO BEEN ITA NOS.246 - 25 9/B/17 16 CONSIDERED ON SIMILAR FACT SITUATION, BY CO-ORDINAT E BENCHES OF THIS TRIBUNAL IN THE CASE OF KARNATAKA STATE CO-OPERATIV E SUBHADRANNA HOUSING FEDERATION LTD. (ITA NOS.1301, 1307 TO 1313 /BANG/2015), RAILWAY HOUSE BUILDING CO-OPERATIVE SOCIETY (ITA NO S.1139, 1140 & 1344/BANG/2015 & 1343/BANG/2014), IN THE CASE OF KAUTILYA HOUSE BUILDING CO-OPERATIVE SOCIETY LTD., (ITA NOS. 1324 TO 1337/BANG/2015 DATED 7/4/2016 AND IN THE CASE OF TE LECOM EMPLOYEES CO-OPERATIVE SOCIETY LTD., IN ITA NOS.227 4 TO 2280/BANG/2016 DATED 12/7/2017. THE LD CIT(A) HAS OBSERVED THAT IN THESE CASES (SUPRA) ALSO, THE CONTENTS OF THE AGREE MENTS WERE SIMILAR TO THOSE OF THE ASSESEE IN THE CASE ON HAND AND THE CO-ORDINATE BENCHES OF THIS TRIBUNAL AFTER EXAMINING THE SAME H AS APPLIED THE RATIO OF THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HO USE BUILDING CO-OPERATIVE SOCIETY LTD., (SUPRA) AND HAVE HELD TH AT THERE WAS NO REQUIREMENT FOR DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. RESPECTFULLY FOLLOWING THE RATIO OF THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF KARNATAKA STATE JUDICIAL DEPARTMENTAL EMPLOYEES HOUSE BUILDING SOCIETY LTD., (SUPRA) AND OF THE CO-ORDINATE BENCHES OF THIS TRIBUNAL IN THE CAS ES OF KARNATAKA STATE CO-OPERATIVE SUBHADRANNA HOUSING FEDERATION L TD., (SUPRA), RAILWAY HOUSE BUILDING CO-OPERATIVE SOCIETY LTD, (S UPRA), KAUTILYA HOUSE BUILDING CO-OPERATIVE SOCIETY LTD., (SUPRA) A ND IN THE CASE OF TELECOM EMPLOYEES CO-OPERATIVE SOCIETY LTD., (SUPRA ) WE FIND NO REASON TO INTERFERE WITH OR DEVIATE FROM THE VIEW T AKEN IN THESE ITA NOS.246 - 25 9/B/17 17 DECISIONS WHICH HAVE BEEN RENDERED ON SIMILAR FACTS AND ISSUES AS IN THE CASE ON HAND. WE, THEREFORE, UPHOLD THE IMPUGN ED 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 RAIS ED BY THE REVENUE (SUPRA), BEING DEVOID OF MERITS, ARE DISMISSED. 4. IN THE RESULT, REVENUES APPEALS FOR ASST. YEARS 2008-09 TO 2014-15 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH OCTOBER, 2017 . SD/- SD/- (N.V VASUDEVAN) (JASO N P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE DATED : 11/10/2017 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVA TE SECRETARY, ITAT, BANGALORE.