Hunter Realtors P.Ltd, Cochin V. DCIT, Ernakulam

ITA 261/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68951 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 06-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: C B M WARRIER
• Section: 133A

Judgement Text

1 ITA NO. 261/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 261/COCH/2013 (ASSESSMENT YEAR 2007-08) M/S HUNTER REALTORS (P) LTD VS DY.CIT, CENT.CIR. 1 34/2277, CHERIYAKOMAROTH ROAD ERNAKULAM MAMANGALAM, PALARIVATTOM PAN : AABCH8803Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI CBM WARRIER RESPONDENT BY : SHRI M ANIL KUMAR, C.I.T DATE OF HEARING : 07-08-2013 DATE OF PRONOUNCEMENT : 30-08-2013 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A)-I, KOCHI DATED 31-12-2012 AND PERTAINS TO ASSESSMENT Y EAR 2007-08. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS ADDIT ION OF RS.10 LAKHS. 3. SHRI CBM WARRIER, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE ENTERED INTO AN AGREEMENT FOR DEV ELOPMENT OF LAND ON 28-03-2007. THE AGREEMENT WAS FOUND DURING THE COU RSE OF SURVEY 2 ITA NO. 261/COCH/2013 OPERATION U/S 133A OF THE ACT ON 26-03-2008. ON TH E BASIS OF THIS AGREEMENT, ACCORDING TO THE LD.REPRESENTATIVE, THE ADDITION OF RS.10 LAKHS IS MADE ON THE GROUND THAT THE ASSESSEE HAS PAID RS .10 LAKHS IN PURSUANCE OF THIS DEVELOPMENT AGREEMENT. 4. REFERRING TO CLAUSE 12 OF THE AGREEMENT DATED 28 -03-2007, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT N O DOUBT CLAUSE 12 OF THIS AGREEMENT SAYS THAT THE DEVELOPER HAS DEPOSITE D WITH THE LAND OWNER RS.10 LAKHS AS SECURITY DEPOSIT. ACCORDING TO THE LD.REPRESENTATIVE, IN FACT, NO SUCH DEPOSIT WAS MADE BY THE DEVELOPER OR ANYBOD Y ELSE. ACCORDING TO THE LD.REPRESENTATIVE, THE AGREEMENT WAS ENTERED INTO AS IF THE DEVELOPER HAS TO DEPOSIT RS.10 LAKHS. HOWEVER, THE RE WAS A TYPOGRAPHICAL ERROR INASMUCH AS THAT INSTEAD OF HAS TO DEPOSIT, THE WORD DEPOSITED WAS TYPED WHICH WAS TAKEN ADVANTAGE OF BY THE ASSES SING OFFICER. ACCORDING TO THE LD.REPRESENTATIVE, EVEN THOUGH AT THE TIME OF AGREEMENT IT WAS DECIDED THAT THE DEVELOPER HAS TO PAY RS.10 LAK HS TOWARDS SECURITY DEPOSIT, SUBSEQUENTLY, AT THE REQUEST OF THE ASSESS EE THE PAYMENT OF RS.10 LAKHS WAS WAIVED. THE ASSESSEE CLARIFIED BEF ORE THE ASSESSING OFFICER THAT THE DEPOSIT OF RS.10 LAKHS WAS WAIVED BY THE LAND OWNER AND IN FACT THE LAND OWNER ALSO CLARIFIED BEFORE THE ASSES SING OFFICER THAT THEY HAVE NOT RECEIVED ANY DEPOSIT FROM THE ASSESSEE. A CCORDING TO THE LD.REPRESENTATIVE, THE COMPANY ITSELF WAS PROMOTED IN MARCH 2007. THE 3 ITA NO. 261/COCH/2013 YEAR UNDER CONSIDERATION IS THE FIRST YEAR OF ASSES SMENT. THEREFORE, THE ASSESSEE COMPANY HAD NO SUCH MONEY TO MAKE SECURITY DEPOSIT OUTSIDE THE BOOKS OF ACCOUNT. SINCE NO PAYMENT WAS MADE BY THE ASSESSEE, ACCORDING TO THE LD.REPRESENTATIVE, THE ADDITION OF RS.10 LAKHS IS NOT JUSTIFIED. 5. ON THE CONTRARY, SHRI M ANIL KUMAR, THE LD.DR SU BMITTED THAT CLAUSE 12 OF THE AGREEMENT CLEARLY SAYS THAT THE DEVELOPER HAS DEPOSITED WITH THE LAND OWNER RS.10 LAKHS AS SECURITY DEPOSIT FOR DUE PERFORMANCE OF THE CONTRACT. THE CLAIM OF THE ASSESSEE THAT THE WORD DEPOSITED WAS TYPED INSTEAD OF HAS TO DEPOSIT WAS CONSIDERED BY THE C IT(A) AND FOUND THAT THERE WAS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAD , AT ANY POINT OF TIME, REQUESTED THE LAND OWNER TO WAIVE THE DEPOSIT. TH EREFORE, THERE IS NO PRESUMPTION THAT THE DEPOSIT WAS WAIVED SUBSEQUENTL Y. ACCORDING TO THE LD.DR, THE ASSESSEE HAS DEPOSITED RS.10 LAKHS WITH THE LAND OWNER OUTSIDE THE BOOKS OF ACCOUNT. THEREFORE, THE ASSES SING OFFICER HAS RIGHTLY MADE THE ADDITION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH THE DEVELOPMENT AGREEMENT DATED 28/07/2007. CLAUSE 12 OF THE AGREEMENT READS AS FOLLOWS: 4 ITA NO. 261/COCH/2013 12. THE DEVELOPER HAS DEPOSITED WITH THE LANDOWNER RS.10,00,000/- (RUPEES TEN LAKHS ONLY) AS SECURITY DEPOSIT FOR THE DUE PERFORMANCE OF THE CONTRACT. THE LANDO WNER SHALL REPAY THE DEPOSIT RECEIVED BY THEM SEPARATELY TO TH E DEVELOPER WITHOUT INTEREST WITHIN ONE MONTH AFTER G ETTING DOOR NUMBERS FOR ALL THE ROOMS DUE TO THE OWNERS. THE CONTENTION OF THE ASSESSEE BEFORE THIS TRIBUNAL IS THAT INSTEAD OF HAS TO DEPOSIT THE WORD DEPOSITED IS TYPED THROUGH O VERSIGHT. FOR THE PURPOSE OF DECIDING WHETHER THE ASSESSEE HAS ALREAD Y DEPOSITED THE MONEY OR HAS TO DEPOSIT, THE WHOLE AGREEMENT HAS TO BE READ TO FIND OUT THE INTENTION OF THE PARTIES TO THE AGREEMENT. ACC ORDINGLY, WE HAVE GONE THROUGH THE ENTIRE CLAUSE OF THE AGREEMENT. THE AG REEMENT ENABLES THE DEVELOPER TO CARRY ON THE CONSTRUCTION OF THE BUILD ING ACCORDING TO THE APPROVED PLAN AS PER THE SPECIFICATION BY USING GOO D MATERIAL UNIFORMLY FOR THE WHOLE CONSTRUCTION. THE AGREEMENT DOES NOT DIS CLOSE THE HANDING OVER OF THE POSSESSION OF THE PROPERTY TO THE DEVEL OPER. THEREFORE, IT APPEARS, ON THE DATE OF THE AGREEMENT THE DEVELOPER WAS ALREADY IN PHYSICAL POSSESSION OF THE PROPERTY. IF THE PHYSIC AL POSSESSION WAS NOT HANDED OVER, THEN, THERE SHALL BE A REFERENCE ABOUT THE HANDING OVER OF THE PHYSICAL POSSESSION TO THE DEVELOPER EITHER AT THE TIME OF EXECUTION OF THE SO-CALLED AGREEMENT FOR DEVELOPMENT OR AT A FUT URE DATE. THE VERY FACT 5 ITA NO. 261/COCH/2013 THAT THE HANDING OVER OF PHYSICAL POSSESSION IS NOT MENTIONED IN THE AGREEMENT CLEARLY SHOWS THAT THE PHYSICAL POSSESSIO N OF THE PROPERTY WAS HANDED OVER TO THE DEVELOPER EARLIER TO THE DATE OF AGREEMENT AND THE DEVELOPER CONTINUES TO BE IN PHYSICAL POSSESSION OF THE PROPERTY. THIS AGREEMENT ALSO ENABLES THE DEVELOPER TO SELL THE AR EA ALLOTTED TO THEM BY ENTERING INTO AGREEMENT WITH PROSPECTIVE PURCHASERS OF THE PROPERTY. THEREFORE, ALL THE CLAUSES MENTIONED IN THE AGREEME NT EXCEPT CONSTRUCTION OF THE BUILDING AND SALE OF RESPECTIVE SHARE TO THE PROSPECTIVE PURCHASERS WERE COMPLIED AS ON THE DATE OF THE AGREEMENT. THE CLAIM OF THE ASSESSEE THAT RS.10 LAKHS HAS TO BE DEPOSITED THEN, THE TIME LIMIT FOR DEPOSIT OF RS.10 LAKHS SHOULD HAVE BEEN MENTIONED. THE VERY FACT THAT TIME LIMIT FOR DEPOSIT OF RS.10 LAKHS IS NOT MENTI ONED / SPECIFIED IN THE AGREEMENT CLEARLY ESTABLISHES THAT THE ASSESSEE HAS DEPOSITED RS.10 LAKHS BEFORE THE EXECUTION OF THE AGREEMENT. IN OT HER WORDS, THE ASSESSEE HAS DEPOSITED RS.10 LAKHS BEFORE THE DATE OF THE AG REEMENT SINCE THE PHYSICAL POSSESSION OF THE PROPERTY WAS HANDED OVER BEFORE THE DATE OF AGREEMENT. THEREFORE, THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT IN CLAUSE 12 OF THE AGREEMENT IT HAS RIGHTLY BEEN SAID THAT THE DEVELOPER DEPOSITED RS.10 LAKHS WITH THE LAND OWNER AS SECURI TY DEPOSIT. THE CLAIM OF THE ASSESSEE NOW IS THAT THE LAND OWNER WAIVED T HE SECURITY DEPOSIT AND THE ASSESSEE HAS NOT PAID ANY DEPOSIT AS AGREED EAR LIER IS AN AFTERTHOUGHT. MOREOVER, THERE IS NO COMMUNICATION BETWEEN THE ASS ESSEE AND THE LAND 6 ITA NO. 261/COCH/2013 OWNER REGARDING THE WAIVER OF THE SO-CALLED DEPOSIT . ONLY BEFORE THE LOWER AUTHORITIES A LETTER WAS FILED CLAIMING THAT THE DE POSIT WAS WAIVED. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CLAI M MADE BEFORE THE ASSESSING OFFICER THAT THE PAYMENT OF SECURITY DEPO SIT WAS WAIVED BY THE LAND OWNER IS AN AFTERTHOUGHT SINCE THE TRANSACTION OF HANDING OVER THE PHYSICAL POSSESSION OF THE PROPERTY FOR DEVELOPMENT AND THE PAYMENT OF DEPOSIT HAS ALREADY BEEN COMPLETED BEFORE THE EXECU TION OF THE AGREEMENT. THIS IS OBVIOUS FROM A HARMONIOUS READI NG OF THE ENTIRE CLAUSES IN THE AGREEMENT. THEREFORE, WE DO NOT FIN D ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITIES. ACCORDINGLY THE SAME IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH AUGUST, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 30 TH AUGUST, 2013 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH