The ITO, Ward-2(1)(2), Ahmedabad V. M/s. Kalika Buildcon Pvt. Ltd., Ahmedabad

ITA 2523/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7003 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 06-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: B K PATEL
• Section: 2

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH C BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.2523/AHD/2015 / ASSTT. YEAR: 2013-14 ITO, WARD-2(1)(2) NAVJIVAN TRUST BLDG. AHMEDABAD. VS. M/S.KALIKA BUILDCON P.LTD., 53, NIRANT PARK OPP: SUN & STEP CLUB, THALTEJ, AHMEDABAD 380 0061. PAN : AAACK 3275 G / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI LALIT P. JAIN, SR.DR ASSESSEE BY : SHRI B.K. PATEL, CA ! / DATE OF HEARING : 13/12/2018 '#$ ! / DATE OF PRONOUNCEMENT: 15 /01/2019 %& / O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER: THIS IS REVENUES APPEAL AGAINST ORDER OF LD.CIT(A) -2, AHMEDABAD DATED 12.7.2016 PASSED FOR THE ASSESSMENT YEAR 2013 -14. 2. SOLE ISSUE RAISED IN THIS APPEAL IS THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS.90.00 L AKHS ON ACCOUNT OF ALLEGED EXTRA INCOME REFLECTED IN THE AIR. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN REAL ESTATE DEVELOPMENT AND CONTRACTOR WORK. THE ASSESSE E HAS FILED ITS RETURN OF INCOME SHOWING TOTAL LOSS OF RS.(-)10,92, 481/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT B Y ISSUANCE OF NOTICE ITA NO.2523/AHD/2016 2 UNDER SECTION 143(2) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD.AO NOTICED THAT THE ASSESSEE AL ONG WITH SHUBHRATNA CO-OP. HSG. SOCIETY AND ONE SMT.VANITABEN DILIPKUMA R HAD SOLD AN IMMOVABLE PROPERTY VIZ. SHOP NO.7 SITUATED AT 3 RD EYE-2 COMPLEX OF SUBHRATNA CO-OP. HSG. SOCIETY LTD. TO ONE SHRI KUTU BDIN F. KAPIDIA FOR A CONSIDERATION OF RS.281 LAKHS. THE AO SOUGHT INF ORMATION FROM THE ASSESSEE IN THIS REGARD. IT WAS EXPLAINED BY THE A SSESSEE THAT THE ASSESSEE-COMPANY WAS APPOINTED AS DEVELOPER BY THE SOCIETY VIZ. SUBHRATNA CO-OP. HOUSING SOCIETY TO DEVELOP THE SAI D SCHEME AS PER THE DEVELOPMENT AGREEMENT. THE ASSESSEE WAS ALSO A UTHORIZED BY THE SOCIETY TO ACCEPT AMOUNT OF BOOKING AND SALE OF UNI TS IN THE SAID SCHEME ON BEHALF OF THE ASSESSEE. IT WAS EXPLAINED THAT THE PROPERTY IN QUESTION WAS EARLIER BOOKED BY SMT.VANITABEN DILIPK UMAR FOR RS.179 LAKHS. THEREAFTER THE SAID SHOP NO.7 WAS SOLD TO KUTUBDIN F. KAPIDIA FOR A CONSIDERATION OF RS.281 LAKHS. THE BUYER HAS PAID A SUM OF RS.90 LAKHS TO THE ASSESSEE, WHICH WAS TAKEN BY THE ASSES SEE AS CREDIT TO THE SOCIETY AND REFLECTED IN THEIR BOOKS. THE BALANCE AMOUNT OF RS.191 LAKHS WAS PAID TO VANITABEN DILIPBHAI (RS.179 LAKHS AGAINST HER BOOKING AMOUNT AND THE BALANCE AMOUNT OF RS.12.00 LAKHS AS HER PROFIT ON SALE). AFTER CONSIDERING THIS EXPLANATION, THE AO PROPOSED AN ADDITION OF RS.90.00 LAKHS, BECAUSE ACCORDING TO AO, DEVELOP ER HAS RECEIVED AN AMOUNT OF RS.90 LAKHS AND SMT.VANITABEN DILIPBHAI H AS RECEIVED RS.179 LAKHS PLUS RS.12 LAKH AS PROFIT. THEREFORE, AN AMO UNT OF RS.90 LAKHS RECEIVED BY THE ASSESSEE WAS ITS INCOME/SURPLUS GEN ERATED OUT OF THE TRANSACTION, AND WAS SUBJECTED TO TAX. THE ASSESSE E EXPLAINED THAT THE AMOUNT OF SALE CONSIDERATION WAS RECEIVED BY THE AS SESSEE ON BEHALF OF THE SOCIETY AS PER DEVELOPMENT AGREEMENT ENTERED IN TO WITH THE SOCIETY AND THE ASSESSEE AND THE SAME WAS REFLECTED IN THE BOOKS OF ACCOUNTS. THE AMOUNT OF RS.90 LAKHS WAS RECEIVED BY THE ASSES SEE AS CREDIT TO THE SOCIETY ACCOUNT AND THE SAME WAS SHOWN ACCORDIN GLY IN THEIR BOOKS, AND THEREFORE, THERE WAS NO INCOME IN THE HA NDS OF THE ITA NO.2523/AHD/2016 3 ASSESSEE. THIS EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE LD.AO. THE AO WAS OF THE VIEW THAT AS PER CLAUSE - 25(A) OF THE DEVELOPMENT AGREEMENT BETWEEN THE ASSESSEE AND THE SOCIETY, ALL SURPLUS/PROFIT RECEIVED FROM THE BUYERS OF THE PROP ERTY SHALL ABSOLUTELY BELONGING TO THE DEVELOPER I.E. THE ASSESSEE, AND T HE AMOUNT OF RS.90 LAKHS RECEIVED BY THE ASSESSEE WAS TO BE TREATED AS EXTRA INCOME/PROFIT EARNED BY THE ASSESSEE, AND WAS TAXED ACCORDINGLY. THE AO ACCORDINGLY MADE ADDITION OF RS.90.00 LAKHS IN THE HANDS OF THE ASSESSEE. AGGRIEVED ASSESSEE WENT IN APPEAL BEFOR E THE LD.CIT(A), WHO AFTER CONSIDERING THE ISSUE IN DETAILS ALLOWED CLAIM OF THE ASSESSEE AND DELETED THE IMPUGNED ADDITION. THE REVENUE IS NOW BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A). 4. BEFORE US, THE LD.DR SUPPORTED ORDER OF THE LD.A O AND FURTHER SUBMITTED THAT AS PER CLAUSE-25(A) OF THE DEVELOPME NT AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND THE SOCIETY, WHATEVER PROFITS AND/OR SURPLUS GENERATED OUT OF THE SALE OF THE PRO PERTY BELONGED TO THE ASSESSEE AND THERE IS NO CASE THAT THE ASSESSEE HAS RECEIVED THE SAID SUM OF RS.90 LAKHS ON BEHALF OF THE SOCIETY. THERE FORE, AO HAS RIGHTLY ADDED THE SAME TO THE INCOME OF THE ASSESSEE, AND T HE FINDING OF THE LD.AO REQUIRES TO BE CONFIRMED. 5. ON THE OTHER HAND, THE LD.AR RELIED UPON THE ORD ER OF THE LD.CIT(A) AND REITERATED SUBMISSIONS AS MADE BEFORE REVENUE AUTHORITIES. HE FURTHER SUBMITTED THAT THE AMOUNT OF RS.90 LAKHS RECEIVED FROM THE BUYER WAS NOT SURPLUS OR PROFIT E ARNED BY THE ASSESSEE, RATHER IT WAS BALANCE AMOUNT RECEIVED AGA INST THE SALE PRICE OF RS.269 LAKHS AS AGREED VIDE BANAKHAT AGREEMENT. IT WAS RECEIVED BY THE ASSESSEE ON BEHALF OF THE SOCIETY AND DUE CR EDIT HAS BEEN GIVEN TO THE SOCIETY IN THEIR ACCOUNTS. THEREFORE, THERE IS NO QUESTION OF TREATING THE SAME AS INCOME OF THE ASSESSEE. ITA NO.2523/AHD/2016 4 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THE REVENUE AND OTHER DETAILS AVAILABLE ON RECORD. THE CASE OF THE ASSESSEE IS THAT AMOUNT OF RS.90 LAKHS RECEIVED BY IT WAS ON BEHALF OF THE SOCIETY WHICH WAS DULY REFLECTED IN ACCOUNTS OF THE SOCIETY, AND THEREFORE, QUESTION OF TREATING THE SAME AS PROFIT TO THIS EXTENT IN THE HANDS OF THE ASSESSEE DOES NOT ARISE. WHEREAS, THE CASE OF THE REVENUE WAS THAT AS PER CLAUSE 25(A) OF THE DEVELOP MENT AGREEMENT, PROFIT OR INCOME OR ANY BENEFIT OR LOSS THAT MAY AR ISE OUT OF THE SALE OF PROPERTY IN THE PROJECT BELONGS TO THE DEVELOPER I. E. ASSESSEE, AND THEREFORE, SURPLUS/PROFIT GENERATED OUT OF SUCH TRA NSACTIONS WILL BELONG TO THE ASSESSEE AND IS TO BE TAXED ACCORDINGLY. W E FIND THAT THE LD.CIT(A) HAS CONSIDERED ALL THESE ASPECTS IN DETAI L. HE HAS CONSIDERED DEVELOPMENT AGREEMENT ENTERED INTO BY THE ASSESSEE AND THE SOCIETY, AND ALSO ACCOUNTING TREATMENT REFLECTED IN ACCOUNTS OF BOTH THE PARTIES AND CAME TO THE CONCLUSION THAT AN AMOUNT OF RS.90 LAKHS RECEIVED IN THE YEAR UNDER CONSIDERATION WAS THE BALANCE AMOUNT RECEIVED FOR AND ON BEHALF OF THE SOCIETY, IN PURSUANCE OF THE RIGHT OF COLLECTION AS PER THE AGREEMENT AND IT WAS NEVER BEEN THE PROFIT OF T HE ASSESSEE. HE FURTHER OBSERVED THAT THE IMPUGNED AMOUNT OF RS.90 LAKHS GENERATED FROM THE ORIGINAL TRANSACTIONS WAS BELONGED TO THE SOCIETY AND NOT THE ASSESSEE. THE ASSESSEE WAS ONLY AUTHORIZED TO COLL ECT THE AMOUNT ON BEHALF OF THE SOCIETY AND THEREFORE, IT WAS NOT THE INCOME OF THE ASSESSEE. THE LD.CIT(A) ALSO MADE A LOGICAL CONCLU SION THAT WHEN THE ASSESSEE HAD RECEIVED AN AMOUNT FROM RS.179 LAKHS A T THE TIME OF BOOKING OF SHOP NO.7 BY THE SAID VANITABEN DILIPKUM AR IN THE PRECEDING YEARS I.E. RS.1 CRORE IN F.Y.2008-09, RS.78 LAKHS I N F.Y.2009-10 AND RS.1.00 LAKH IN F.Y.2012-13, THE SAME WAS NOT TREAT ED AS INCOME OF THE ASSESSEE IN THE RESPECTIVE YEARS, THEN HOW THE RECE IPT OF RS.90 LAKHS COULD BE TAXED IN THE YEAR OF RECEIPT I.E. A.Y.2013 -14 RESPECTIVELY. THE LD.CIT(A) ALSO FOUND THAT THE SALE IN THE CASES OF OTHER UNITS IN EARLIER YEARS, BY WHICH THE ASSESSEE HAS RECEIVED SALE PROC EEDS FOR AND ON ITA NO.2523/AHD/2016 5 BEHALF OF THE SOCIETY, HAS NOT BEEN BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE, FOR THE SIMPLE REASON THAT THE SAME WAS N OT BELONGING TO THE ASSESSEE, BUT WAS RECEIVED ON BEHALF OF THE ASSESSE E SOCIETY. THIS WAS ACCEPTED BY THE DEPARTMENT. THEREFORE, THE FINDINGS OF THE AO WERE FACTUALLY AS WELL AS LOGICALLY INCORRECT. FOR BETT ER CONCEPTUALIZATION OF THE ISSUE AND TO ARRIVE AT A JUST CONCLUSION, WE WO ULD QUOTE THE OBSERVATION AND FINDING OF THE LD.CIT(A) RECORDED I N HIS ORDER, WHICH READ AS UNDER: 2.3. DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE WRITTEN SUBMISSION OF THE APPELLANT. THE APPELLANT IS ENGAGED IN THE BUSINESS OF REAL ES TATE DEVELOPMENT AND CONTRACTORS. THE AO HAS MADE THE AD DITION OF RS.90 LAKHS IN THE HANDS OF THE APPELLANT TOWARDS S ALE PROCEEDS RECEIVED FROM KUTBUDDIN F. KAPADIA AND 9 OTHER PERS ONS RECEIVED IN RESPECT OF THE LAST INSTALLMENT OF THE SALE PROC EEDS OF SHOP NO.7 SOLD OWNED BY THE SOCIETY. THE APPELLANT WAS ALSO C ONFIRMING PARTY TO THE SAID SALE DEED. IT HAS BEEN NOTICED TH AT IN RESPECT OF THE AFORESAID SHOP, THE APPELLANT COMPANY HAS RECEI VED RS.179 LAKHS IN THE PRECEDING YEARS THROUGH DIFFERENT CHEQ UES FROM VANITABEN DILIPKUMAR AS BOOKING AMOUNT BEING A DEVE LOPER, TO WHOM INITIALLY THE AFORESAID SHOP WAS SOLD FOR THE SOCIETY. SUBSEQUENTLY THIS SHOP WAS SOLD IN THE YEAR UNDER C ONSIDERATION BY VANITABEN DILIPKUMAR TO KUTUBUDIN F. KAPADIA IN CONSIDERATION OF RS.281 LAKHS WHICH INCLUDED THE PROFIT OF RS.12 LAKHS RECEIVED BY VANITABEN DILIPKUMAR. 2.4. THE AO OBSERVED THAT AS PER THE DEVELOPMENT A GREEMENT ENTERED BY THE APPELLANT WITH THE SOCIETY NAMELY SU BHRATNA CO.OP, HOUSING SOCIETY LTD. DTD. 10.07.2008 AND ITS CLAUSE NO.25 (A) IT WAS OBSERVED THAT THE PROFIT OR INCOME OR AN Y BENEFIT OR LOSS THAT MAY ARISE OUT OF THE DISPOSAL OF THE PREMISES (LAND AND CONSTRUCTION AND INFRASTRUCTURE) OF THE PROPOSED PR OJECT WILL BELONG TO THE DEVELOPER. FURTHER ALL SURPLUS THAT M AY BE RECEIVED IN ADDITION TO THE COST OF THE PROJECT TO INCLUDE T HE SAID CONSIDERATION OF THE LAND PAYABLE TO THE SOCIETY, R ECEIVED FROM THE PROSPECTIVE ACQUIRERS OF THE PREMISES SHALL ABSOLUT ELY BELONG TO THE DEVELOPER AS ITS PROFITS. THE LOSSES, IF ANY, S HALL ALSO BE BORNE AND PAID BY THE DEVELOPER. AS PER THE INTERPRETATIO N OF THE A.O. ABOUT THE AFORESAID CLAUSE RS.90 LAKHS AS SALE CONS IDERATION ITA NO.2523/AHD/2016 6 RECEIVED DURING THE YEAR FROM THE AFORESAID PARTY W AS THE SURPLUS RECEIVED AS INCOME OF THE APPELLANT AND SAME WAS HE LD TO BE TAXED IN ITS HANDS. 2.5. THE CLAIM OF THE ASSESSEE THAT THE AFORESAID AMOUNT WAS RECEIVED BY IT FOR AND ON BEHALF OF THE SOCIETY AND THE SAID AMOUNT OF RS.90 LAKHS HAS DULY BEEN ACCOUNTED FOR I N THE BOOKS OF THE SOCIETY WAS FOUND NOT ACCEPTABLE SINCE AS PE R AGREEMENT WHATEVER INCOME/PROFIT HAS BEEN RECEIVED, THE SAME BELONG TO THE APPELLANT COMPANY AND THE QUESTION OF ACCOUNTIN G THE SAME IN THE HANDS OF THE OTHER PARTY DOES NOT ARISE AT A LL. THE AO ALSO RELIED UPON THE CLAUSE-21 OF THE DEVELOPMENT AGREEM ENT WHICH STATES THAT THE DEVELOPER SHALL BE ENTITLED TO RECE IVE AND RETAIN WITH ALL THE MONIES FROM THE PERSONS TO WHOM THE SA ID PREMISES ARE SOLD OR ALLOTTED AS THE CASE MAY BE, IN THE SCH EME TO BE CONSTRUCTED BY THE DEVELOPER ON THE SAID LAND TO AP PROPRIATE THE SAME IN SUCH A MANNER AS THE DEVELOPER MAY DEEM FIT . 2.6. IN VIEW OF THE AFORESAID CLAUSES TO THE DEVEL OPMENT AGREEMENT, THE AO OBSERVED THAT THE AMOUNT OF RS.90 LAKHS RECEIVED BY THE SOCIETY FROM KUTUBUDDLN F. KAPADIA AND OTHERS BELONGED TO THE APPELLANT COMPANY TOWARDS THE SALE OF THE SHOP AND IT IS NOT THE CASE THAT THE APPELLANT COMPANY R ECEIVED THE SAME ON BEHALF OF THE SOCIETY. THUS THE ADDITION WA S MADE AS INCOME/PROFIT EARNED BY IT DURING THE YEAR UNDER CO NSIDERATION FROM THE ABOVE PROJECT. 2.7. ON THE OTHER SIDE, THE APPELLANT HAS SUBMITTE D THAT THE SOCIETY HAS FLOATED THE SCHEME NAMELY 3RD EYE-2 ON ITS LAND FOR WHICH THE APPELLANT HAS BEEN APPOINTED AS DEVELOPER OF THE SAID SCHEME AS PER THE DEVELOPMENT AGREEMENT PROVIDED TO THE AO IN THE ASSESSMENT PROCEEDINGS. THE APPELLANT WAS AUTHO RIZED BY THE SOCIETY TO ACCEPT THE AMOUNT OF BOOKING AND SALE OF UNITS IN THE SAID SCHEME ON BEHALF OF THE SOCIETY. ACCORDINGLY, THE APPELLANT HAD RECEIVED RS.179 LAKHS FROM TIME TO TIME FROM VA NITABEN DILLPKUMAR WHO HAD BOOKED SHOP NO.7 ON GROUND FLOOR OF THE SAID SCHEME AGAINST THE TOTAL CONSIDERATION OF RS.269 LA KHS AS AGREED BY THE REGISTERED BANAKHAT AGREEMENT DTD. 18.8.2009 ENTERED INTO BETWEEN THE VANITABEN DILIPKUMAR AS BUYER AND SHUBHARANTA CO,OP. HOUSING SOCIETY AS OWNER OF THE PREMISES TO WHICH THE APPELLANT WAS A CONFIRMING PARTY. A COPY OF THE SAI D REGISTERED BANAKHAT AGREEMENT WAS PROVIDED TO THE APPELLANT. A S PER THE AFORESAID AGREEMENT, OUT OF THE SALE CONSIDERATION OF RS.269 LAKHS THE APPELLANT HAD RECEIVED RS.179 LAKHS IN THE PREC EDING YEARS ON BEHALF OF THE SOCIETY AND THE BALANCE AMOUNT OF RS. 90 LAKHS IN THE YEAR UNDER CONSIDERATION FOR THE SOCIETY. THEREAFTE R IN THE YEAR ITA NO.2523/AHD/2016 7 UNDER CONSIDERATION THIS SHOP WAS SOLD TO KUTUBUDIN F. KAPADIA AND 9 OTHER PERSONS FOR RS.281 LAKHS BY VANITABEN D ILIPKUMAR BY EARNING THE PROFIT OF RS.12 LAKHS. SINCE THE SOCIET Y HAD TO OBTAIN BALANCE OF RS.90 LAKHS OUT OF THE SALE CONSIDERATIO N WHICH HAS BEEN RECEIVED BY THE APPELLANT DURING THE YEAR UNDE R CONSIDERATION WHILE REGISTERED THE SALE DEED IN FAV OUR OF KUTUBUDDIN F. KAPADIA. SO THE APPELLANT SUBMITTED T HAT IT WAS THE MONEY RECEIVED FROM SHRL KUTUBUDDIN F. KAPADIA FOR AND ON BEHALF OF THE SOCIETY WHICH DOES NOT BELONG TO THE APPELLANT. THEREFORE, THE QUESTION OF HAVING ANY SURPLUS/PROFI T OF THE PROJECT TO THE ABOVE EXTENT OF RS.90 LAKHS WHICH WAS NOTHIN G BUT THE SALE CONSIDERATION BELONGING TO THE SOCIETY DOES NOT ARI SE AT ALL. 2.8. HAVING CONSIDERED THE FACTS AND SUBMISSION, IT IS NOTICED THAT A REGISTERED DEVELOPMENT AGREEMENT DTD. 10.7.2008 W AS MADE BY THE APPELLANT WITH THE SOCIETY ON FINAL PLOT NO.680 /2/ PART OF TP SCHEME NO.3/5 ON WHICH THE SCHEME IN THE NAME OF 3R D EYE-2 WAS LAUNCHED. THIS DEVELOPMENT AGREEMENT WAS SUBSEQ UENTLY CLARIFIED VIDE AGREEMENT DTD. 07.10.2008. THE RELEV ANT CLAUSES OF THE AGREEMENT ARE REPRODUCED AS UNDER:- (C) THE AFORESAID LANDS BEARING (I) FINAL PLOT NO. 680/2 (PART) (II) FINAL PLOT NO. 680/3 (III) FINAL PLOT N O. 681/6/1 AND (IV) FINAL PLOT NO. 681/6/1 PAIKI 1, COLLECTIVE LY ADMEASURING 3084 SQ. MTRS. (AS PER REVENUE RECORDS AND INCLUSIVE OF LAND ADMEASURING 149.88 SW. MRTS. FOR ROAD WIDENING) ARE ADJOINING TO EACH OTHER. THE AHMEDABA D MUNICIPAL CORPORATION HAS APPROVED THE PLAN FOR AMALGAMATION OF SAID LANDS AND ISSUED ITS RAJA CHIT THI IN THIS BEHALF (REF. RAJA CHITTHI NO, 10790/031108/A54 84/M1 DATED 03/12/2009. FULL PARTICULARS OF / DESCRIPTION OF THE SAID LANDS ARE DESCRIBED IN THE FIRST SCHEDULE HERE UNDER WRITTEN AND THE SAME IS HEREINAFTER COLLECTIVELY RE FERRED TO AS 'THE SAID LAND'. FURTHER THE SAID LAND IS ADJOIN ING TO LAND OF FINAL PLOT NO. 680/1. (F) AS THE PARTY OF THE SECOND PART WAS DESIROUS O F HAVING ONE COMMERCIAL SHOP IN THE SAID THIRD EYE TW O COMPLEX, THEY HAD APPROACHED THE CONFIRMING PARTY H ERETO, FOR GETTING FULL INFORMATION IN RESPECT OF SAID COM PLEX AS A WHOLE AND THE CONFIRMING PARTY HAD GIVEN FULL INFOR MATION AND PARTICULARS ABOUT THE SAID COMPLEX INCLUDING TH E TITLES OF THE SOCIETY, APPROVAL OF PLANS AND ALL OTHER PER MISSIONS AND SANCTION, ALT TYPES OF BUILDING RAW MATERIALS T O, TO BE USED IN THE COMPLEX / BUILDING, FACILITIES AND AMEN ITIES PROVIDED / TO BE PROVIDED, COMMON RIGHTS AND ITA NO.2523/AHD/2016 8 RESPONSIBILITIES OF ALLOTTEE MEMBERS AND / OR RESER VED RIGHTS UPON SOME FACILITY / UTILITY GIVEN / TO BE GIVEN TO MEMBERS, AREA OF DIFFERENT SHOPS AND OFFICES, CONTRIBUTION / CONSIDERATION TO BE PAID BY THE ALLOTTEE MEMBER/S, RIGHTS, RESPONSIBILITIES AND OBLIGATIONS OF ALLOTTEE MEMBER /S, TERMS AND MODE OF PAYMENT, ADDL. COSTS / CHARGES TO BE PA ID, TIME SCHEDULE FOR COMPLETION OF SCHEME / COMPLEX ET C. THE CONFIRMING PARTY HAD ALSO SHOWN TO THE PARTY OF THE SECOND PART ALL THE DOCUMENTS, WRITINGS, PERMISSIONS, PLAN S, SANCTIONS ETC. PERTAINING TO THE SAID LAND AND THE SAID COMPLEX, BUILDING AND THE PARTY OF THE SECOND PART HAS PERUSED / VERIFIED THE SAME AND AFTER BEING FULLY S ATISFIED THE PARTY OF THE SECOND PART HAD REQUESTED THE PART Y OF THE THIRD PART TO MAKE AVAILABLE FOR THEM, SHOP NO. 06 FOR THE PARTY OF THE SECOND PART. IN THIS BEHALF, ALL THE T ERMS OF ALLOTMENT OF SAID SHOP NO. 06 WERE FINALLY DECIDED, FIXED AND AGREED BY AND BETWEEN THE PARTIES HERETO,' 2.9. AS PER THIS AGREEMENT THE APPELLANT WAS ENTIT LE TO RECEIVE 25% OF THE TOTAL COST OF THE CONSTRUCTION AS A DEVE LOPMENT FEES BEING INCOME. THROUGH THIS AGREEMENT, THE APPELLANT HAS BEEN GIVEN THE RIGHT TO MAKE THE BOOKING OR TO ENTER INT O AN AGREEMENT AND COLLECT THE MONEY FOR BOOKING AMOUNT FOR SALE O F THE UNIT DEVELOPED FOR AND ON BEHALF OF THE SAID SOCIETY. AL L THE RECEIPTS FROM THE BOOKING AMOUNT WERE SHOWN IN THE BALANCE S HEET AS ADVANCE FROM CUSTOMERS AND AMOUNT GIVEN TO THE SAID SOCIETY WERE SHOWN IN THE LOANS AND ADVANCES TO OTHERS IN P URSUANCE TO THE AGREEMENT. 2.10. IT HAS BEEN NOTICED THAT AS AGAINST THE SALE OF SHOP NO.7, AT GROUND FLOOR FOR THE CONSIDERATION OF RS.269 LAK HS SOLD TO VANITABEN DILIPKUMAR ADVANCE PAYMENT OF RS.179 LAKH S WAS RECEIVED BY THE APPELLANT FOR AND ON BEHALF OF THE SOCIETY IN THE PRECEDING YEARS I.E. RS.1 CRORE IN F.Y. 2008-09, RS .78 LAKHS IN F.Y. 2009-10 AND BALANCE RS. 1 LAKH IN F.Y. 2012-13 AS IS VERIFIABLE FROM THE LEDGER ACCOUNT COPY OF SMT. VAN ITABEN DILIPKUMAR IN THE BOOKS OF ACCOUNTS OF THE APPELLAN T. THEREAFTER VANITABEN SOLD THIS PROPERTY FOR RS.281 LAKHS VIDE REGISTERED SALE DEED DTD. 04.01.2013 IN WHICH THE APPELLANT WAS CON FIRMING PARTY TO THE SAID SALE DEED BEING DEVELOPER. BY VIRTUE OF THIS SALE DEED APPELLANT RECEIVED RS.90 LAKHS DUE AS PER THE ORIGI NAL REGISTERED AGREEMENT TO SALE DTD. 18.08.2009 AND VANITABEN GOT THE BALANCE AMOUNT OF RS.L2 LAKHS AS A PROFIT AS MENTIONED IN T HE SALE DEED. THEREFORE, RS.90 LAKHS RECEIVED IN THE YEAR UNDER C ONSIDERATION IS THE BALANCE AMOUNT RECEIVED FOR AND ON BEHALF OF TH E SOCIETY IN ITA NO.2523/AHD/2016 9 PURSUANCE TO THE RIGHT OF COLLECTION AS PER THE DEV ELOPMENT AGREEMENT AND IT WAS NEVER BEEN THE PROFIT OF THE A PPELLANT. 2.11. RECEIVING THE BALANCE AMOUNT OF RS.90 LAKHS DOES NOT AMOUNT INCOME TO THE APPELLANT AS IT WAS FROM THE O RIGINAL TRANSACTION WHICH WAS BELONGING TO THE SOCIETY AND NOT TO THE APPELLANT. THE APPELLANT HAS ONLY AUTHORIZED TO COL LECT THE AMOUNT FOR AND ON BEHALF OF THE SAID SOCIETY AND THEREFORE IT WAS NOT THE INCOME OF THE APPELLANT. THIS FACT WAS ALSO EVIDENT FROM THE ACCOUNTING ENTRIES MADE BY THE APPELLANT IN ITS BOO KS OF ACCOUNT BY DEBITING THE ACCOUNT OF THE PARTY AND CREDITING THE ACCOUNT OF THE SOCIETY. AS HAS BEEN MENTIONED IN THE PRECEDIN G PARAS THAT THE APPELLANT HAD THE INCOME IN THE FORM OF DEVELOP MENT FEE @25% OF THE COST OF THE CONSTRUCTION WHICH HAS BEEN DULY RECORDED ON YEAR TO YEAR BASIS IN ITS PROFIT AND LO SS ACCOUNT. 2.12. CONSIDERING THE FACTS, THE LOGIC OF TAXING R S.90 LAKHS RECEIVED AS THE LAST INSTALLMENT OF THE SALE CONSID ERATION OF THE SHOP NO.7 FOR AND ON BEHALF OF THE SOCIETY IS NOT A CCEPTABLE. WHEN THE APPELLANT HAD ALSO RECEIVED RS.179 LAKHS F ROM THE SAME PARTY NAMELY VINITABEN DILIPKUMAR IN THE PRECEDING YEARS (RS. 1 CRORE IN F.Y. 2008-09, RS.78 LAKHS IN F.Y. 2009-10 AND BALANCE RS.1 LAKH IN F.Y. 2012-13) AND THE SAME HAVE NOT BE EN TREATED AS INCOME OF THE APPELLANT IN THE RESPECTIVE YEARS, TH EN ON THE SAME LOGICS THE RECEIPTS OF RS. 90 LACS WAS ALSO TO BE N OT TAXED IN THE YEAR OF RECEIPT I.E. A. Y. 2013-14 RESPECTIVELY. NO T ONLY WITH REGARD TO THE SALE OF SHOP NO.7 BUT FOR THE SALE OF OTHER UNITS FOR WHICH THE APPELLANT HAS RECEIVED THE SALE PROCEEDS FOR AND ON BEHALF OF THE SOCIETY HAS NOT BEEN BROUGHT TO TAX I N THE HANDS OF THE APPELLANT OBVIOUSLY FOR THE REASON THAT THOSE W ERE NOT PERTAINING TO THE APPELLANT BUT THE SAME WERE RECEI VED AS AN AGENT FOR AND ON BEHALF OF SOCIETY. THUS, THERE WAS NO DIFFERENCE ON FACTS WITH REGARD TO RECEIPTS OF THE SALE PROCEE DS OF RS. 90 LACS IN THE YEAR UNDER CONSIDERATION. 2.13. IT IS WORTH HERE TO MENTION THAT IN THE PREC EDING YEARS THE APPELLANT HAD COLLECTED THE RECEIPTS TOWARDS THE SA LE PROCEEDS OF VARIOUS UNITS FOR AND ON BEHALF OF THE SOCIETY IN D IFFERENT YEARS AS UNDER:- SHUBHRATNA CO.OP. HOU. SOC. LTD. YEAR UNIT SQ. FEET DOC AMOUNT CHARGES SALES 31/03/2009 31/03/2010 12 30337.00 149287500.00 2936500.00 152224000.00 ITA NO.2523/AHD/2016 10 31/03/2011 11 21442.00 50131364.00 3898900.00 54030264.00 31/03/2012 3 9680.00 41721000.00 2015700.00 43736700.00 31/03/2013 3 9473.00 53450000.00 297000.00 53747000.00 31/03/2014 3 8883.00 44030429.00 44030429.00 TOTAL 32 79815.00 338620293.00 9148100.00 347768393.00 2.14. FURTHER IT HAS ALSO BEEN NOTICED THAT THE AP PELLANT HAD RECEIVED THE DEVELOPMENT FEE IN DIFFERENT YEARS FRO M THE SOCIETY AND OFFERED FOR TAXATION IN THE PROFIT AND LOSS ACC OUNT OF THE RESPECTIVE YEARS WHICH HAD NOT BEEN DOUBTED BY THE A.O. ALONG WITH THE DEVELOPMENT FEE RECEIVED FROM THE SOCIETY, THE APPELLANT HAD CHARGED THE SERVICE TAX FROM THE SOCIETY AND TH E SOCIETY HAS ALSO MADE THE TDS UPON SUCH DEVELOPMENT FEE PAYMENT S TO THE APPELLANT. THE DETAILS OF SUCH RECEIPTS ARE NOTED A S UNDER:- SHUBHRATNA CO.OP. HOU. SOC. LTD. SR. NO. A.Y. DEVELOPMENT FEE RECEIVE FROM SOCIETY SERVICE TAX DEVELOPMENT FEE RECEIVE FROM SOCIETY TOTAL TDS 1 2009-10 3019792.00 360997.00 3380789.00 383043.00 2 2010-11 7030000.00 724090.00 7754090.00 878538.00 3 2011-12 4034335.00 415537.00 4449872.00 741 646.00 2.15. THUS, THE APPELLANT HAD THE RIGHT TO COLLECT THE DEVELOPMENT FEE IN CONSIDERATION TO THE DEVELOPMENT OF THE SCHE ME WHICH WAS @25% OF THE COST OF THE PROJECT WHICH HAS BEEN DULY SHOWN AS INCOME IN THE PROFIT AND LOSS ACCOUNT FROM INCEPTIO N OF THE PROJECT AND THE SAME HAS NOT BEEN REBUTTED BY THE A.O. FURT HER THE APPELLANT HAS ALSO RECEIVED THE SALE PROCEEDS IN RE SPECT OF SALE OF THE UNITS IN THE SCHEME IN DIFFERENT YEARS OF WHICH DETAILS HAVE BEEN NOTED IN THE AFORESAID PARAS AND NO SUCH SALE PROCEEDS REQUIRED TO BE TAXED IN THE HANDS OF THE APPELLANT AS THOSE WERE BELONGING TO THE SOCIETY ONLY AND NOT TO THE APPELL ANT. IN VIEW OF THE ABOVE, THE SALE PROCEEDS OF RS.90 LAKHS RECEIVE D IN THE YEAR UNDER CONSIDERATION AS HAS BEEN TREATED AS INCOME O F THE APPELLANT THOUGH NOT BELONGING TO IT IS NOT JUSTIFI ED. ITA NO.2523/AHD/2016 11 2.16. IN VIEW OF THE AFORESAID DISCUSSION, THERE I S NO CASE TO MAKE THE ADDITION IN THE HANDS OF THE APPELLANT FOR THE SALE PROCEEDS OF THE SHOP NO.7 WHICH IS OWNED AND BELONG ING TO THE SOCIETY ONLY. THE APPELLANT WAS NOT THE OWNER OF TH E SAID SCHEME BUT IT HAD THE RIGHT TO DEVELOP THE SCHEME ONLY. TH E AO'S OBJECTION THAT AS PER CLAUSE-25(A) THE SURPLUS OF T HE PROJECT HAS TO BE TAXED IN THE HANDS OF THE APPELLANT ONLY IS W ITHOUT ANY BASIS. NOWHERE THE AO HAS WORKED OUT THE NET SURPLU S DERIVED ON THE ENTIRE SCHEME OF THE SOCIETY. AN AMOUNT OF RS.9 0 LAKHS RECEIVED BY THE APPELLANT IN THE LAST INSTALLMENT O F THE SHOP NO.7 CANNOT BE SAID TO BE THE SURPLUS /PROFITS OF THE SC HEME AND HENCE SAME IS NOT LIABLE TO BE TREATED AS INCOME OF THE A PPELLANT IN VIEW OF THE CLAUSES OF THE DEVELOPMENT AGREEMENT AS ALLE GED BY THE A.O. 2.17. FOR THE SALE PROCEEDS RECEIVED IN RESPECT OF VARIOUS UNITS IN THE SCHEME THE APPELLANT HAS NEVER CREDITED SUCH SA LE PROCEEDS IN ITS PROFIT AND LOSS ACCOUNT BUT THE SAME HAVE BEEN CREDITED TO THE ACCOUNT OF THE SOCIETY ONLY. IN OTHER WORDS, THE PR OFIT AND LOSS ACCOUNT HAVE NEVER BEEN GIVEN EFFECT IN RESPECT OF THE RECEIPTS TOWARDS SALE PROCEEDS AND PAYMENTS MADE TO SOCIETY THEREOF. ALL THESE ENTRIES HAVE BEEN MADE IN THE PERSONAL ACCOUN T OF THE PARTIES AND SOCIETY. THE BALANCES IN THEIR LEDGER A CCOUNT HAVE BEEN CARRIED TO THE BALANCE SHEET WHICH WERE IN ORD ER. THESE ACCOUNTING ENTRIES HAVE NEVER BEEN CHALLENGED BY TH E AO IN THE YEAR UNDER CONSIDERATION AND ALSO IN THE PRECEDING YEARS. 2.18. IN VIEW OF THE AFORESAID DISCUSSION, THE ADD ITION MADE BY THE AO IN THE HANDS OF THE APPELLANT IS FOUND UNTEN ABLE AND SAME IS DELETED. THUS THE GROUND OF APPEAL IS ALLOWED. 7. ON PERUSAL OF THE ABOVE ORDER OF THE LD.CIT(A), WE FIND THAT THE LD.CIT(A) HAS ANALYZED ALL MATERIALS VIZ. BOOKS OF ACCOUNTS OF THE ASSESSEE, RECEIPTS COLLECTED BY THE ASSESSEE TOWARD S SALE OF VARIOUS UNITS ON BEHALF OF THE SOCIETY IN THE PRECEDING YEA RS, DETAILS DEVELOPMENT FEES ALONG WITH TDS COLLECTED FROM THE SOCIETY, RELEVANT CLAUSES OF DEVELOPMENT AGREEMENT ENTERED INTO BY TH E ASSESSEE AND THE SOCIETY, WHILE ARRIVING AT THE CONCLUSION. THER E IS NO MATERIAL PLACED BEFORE US, WHICH COMPEL US TO DEVIATE FROM THE FIND ING OF THE LD.CIT(A). THEREFORE, CONSIDERING WELL REASONED ORDER OF THE L D.CIT(A), WE DO NOT ITA NO.2523/AHD/2016 12 FIND MERIT IN THE APPEAL OF THE REVENUE. ORDER OF THE LD.CIT(A) IS UPHELD, AND THE GROUND OF APPEAL OF THE REVENUE IS REJECTED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 15 TH JANUARY, 2019 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (AMARJIT SINGH) ACCOUNTANT MEMBER