Income Tax Officer (TDS), Bangalore V. M/s. ITC Employees Housing Co-Operative Society Ltd, Bangalore

ITA 264/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4764 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: VISHNU MOORTHI
• Keywords: Capital asset; Competent authority; Tax effect
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO S . 264 TO 271/BANG/2017 ASSESSMENT YEAR S : 2008 - 09 TO 2011 - 12 THE INCOME TAX OFFICER (TDS), WARD 2 (1), BANGALORE. VS. M/S. ITC EMPLOYEES HOUSING CO-OPERATIVE SOCIETY LTD., NO. 34, HIGH STREET, COOKE TOWN, BANGALORE 560 005. PAN: AAAAI0532L / BLRIO5890D APPELLANT RESPONDENT C.O. NOS. 66 TO 69/BANG/2017 (IN ITA NOS. 264,266,268 & 270/BANG/2017) ASSESSMENT YEAR S : 2008 - 09 TO 2011 - 12 M/S. ITC EMPLOYEES HOUSING CO-OPERATIVE SOCIETY LTD., NO. 34, HIGH STREET, COOKE TOWN, BANGALORE 560 005. PAN: AAAAI0532L / BLRIO5890D VS. THE INCOME TAX OFFICER (TDS), WARD 2 (1), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI VISHNU MOORTHI, CA REVENUE BY : DR. P.V. PRADEEP KUMAR, ADDL. CIT (DR) DATE OF HEARING : 15 . 0 5 .2018 DATE OF PRONOUNCEMENT : 25 . 0 5 .201 8 O R D E R PER BENCH; OUT OF THIS BUNCH OF 8 APPEALS FILED BY THE REVENUE AND 4 COS FILED BY THE ASSESSEE, THE APPEALS FILED BY THE REVENUE ARE FOR ASSESSMENT YEARS 2008-09 TO 2011-12 IN RESPECT OF DEMAND RAISED BY THE AO U/ S. 201(1) ANDU/S. 201(1A) OF IT ACT AND THE COS FILED BY THE ASSESSEE ARE ALS O FOR THE SAME FOUR ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 2 OF 24 ASSESSMENT YEARS IN RESPECT OF THESE SAME TWO ISSUE S OF DEMAND U/S. 201(1) AND DEMAND U/S. 201(1A) AND ALL THESE ARE FILED AGA INST A COMBINED ORDER OF LD. CIT(A)-13, BANGALORE DATED 02.11.2016. 2. ALL THESE WERE HEARD TOGETHER AND ARE BEING DISP OSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. IDENTICA L GROUNDS AND IDENTICAL ADDITIONAL GROUNDS ARE RAISED BY THE REVENUE IN THE SE FOUR YEARS AND HENCE, THE SAME ARE REPRODUCED HEREIN BELOW FROM THE APPEAL FO R ASSESSMENT YEAR 2008- 09 IN ITA NO. 264/BANG/2017. 1. THE ORDER OF CIT(A) IS OPPOSED TO THE FACTS AND NATURE OF THE CASE ON HAND. 2. THE LD. 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 LD. CIT (A) OUGHT TO HAVE CONSIDERED THE FAC T THAT AS PER THE ASSESSEE'S AGREEMENT WITH THE DEVELOPER THE WORKS T O BE CARRIED OUT LIKE FOR PROCURING OF LAND, DEVELOPING, CONVERSION, PLAN FOR APPROVAL, DRAINAGE, CULVERTS AND LAYING ROADS ETC., CLEARLY A TTRACTED PROVISIONS OF SECTION 194C. 5. THE ID. CIT (A) OUGHT TO HAVE CONSIDERED THE FAC T THAT THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE DEV ELOPER ARE IN THE NATURE OF COMPOSITE CONTRACTS FOR WORKS FOR WHICH P ROVISIONS 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 JUDI CIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO-OPERATIVE SOCIETIES IN ITA NO. 1275 OF 2036 AND THE ITAT'S ORDER IN THE CASE OF M/S. KAUTI LYA HOUSE BUILDING CO-OPERATIVE SOCIETY LIMITED IN ITA NO. 13 24 TO 1337/BANG/2015 DATED 7.4.2016 WHILE ALLOWING THE AS SESSEE'S APPEAL WHICH HAVE BEEN ACCEPTED BY THE DEPARTMENT ONLY FOR LOW TAX EFFECT AND NOT IN PRINCIPLE. 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 ORDER HAS BEEN PASSED BY THE CIT(A) AND THEREFORE PARA 5 OF THE CBDT'S CIRCULAR NO. 21 OF 2 015 DATED ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 3 OF 24 10.12.2015 IS APPLICABLE IN THIS CASE. FOR THESE AND OTHER GROUNDS THAT MAY BE RAISED DURI NG THE COURSE OF APPEAL AND ACTUAL HEARING IT IS PRAYED THAT THE ORD ER 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. ADDITIONAL GROUNDS:- 1. LD . CIT (APPEALS) FAILED TO APPRECIATE THE FACT THAT THE RESPONDENT HOUSING SOCIETY ENTERED INTO A TRIPARTITE AGREEMENT / MOU WITH A DEVELOPER/ CONTRACTOR AND A VENDOR FOR DEVELOPMENT OF A SELF-CONTAINED LAYOUT WHERE IN , THE RETAILS CLEARLY SHOW THAT (I) THE VENDOR, BEING THE ABSOLUTE OWNER OF THE UN-CONVERTED AGRICULTURAL LAND (PROPERTY), HAS CONSENTED FOR SELLING OF INDIVIDUAL SITES TO THE MEMBERS OF THE RESPONDENT HOUSING SOCIETY/ PURCHASER (II) THE DEVELOPER / CONTRACTOR AGREED TO DEVELOP THE PROPERTY BELONGING TO THE VENDOR INTO RESIDENTIAL S ITES, SO THAT THE VENDOR CAN DIRECTLY SELL THE SITES TO T HE MEMBERS OF THE RESPONDENT SOCIETY (III) THE RESPONDENT HOUSING SOCIETY AGREED TO PURCHASE THE DEVELOPED SITES AT A FIXED PRICE PER SQFT FROM THE VENDOR AND PAID CERTAIN SUM IN PURSUANCE OF THE AGREEMENT . (IV) THE VENDOR AUTHORIZED THE DEVELOPER TO NEGOTIATE ON HIS BEHALF WITH THE PURCHASER AND TO FORM THE LAYOUT CONSISTING OF RESIDENTIAL SITES (V) IT IS FURTHER AGREED BY THE VENDOR AND DEVELOPER TO PROCURE BALANCE LANDS ONLY IN THE NAME OF VENDOR OR HIS NOMINEES BY VIRTUE OF SALE DEEDS 2. LD . CIT (APPEALS) WOULD HAVE SEEN FROM THE RECO RDS THAT THE VENDOR, BEING ABSOLUTE OWNER OF THE PROPERTY, H AS UNDERTAKEN TO SELL THE DEVELOPED SITES TO THE RESPO NDENT SOCIETY/ PURCHASER OR ITS MEMBERS AT A FIXED PRICE AND THE RESPONDENT SOCIETY HAS AGREED TO PURCHASE SUCH SITE S AND PAID CERTAIN SUM (CLAUSE 2 THE AGREEMENT ) IN PURSU ANCE OF THE AGREEMENT . ALL THESE ARRANGEMENTS IN THE IMPUGNED MOU, READ AS A WHOLE, CONFIRM THE PRIVILEGES OF OWNERSHI P ON RESPONDENT SOCIETY WITHOUT TRANSFER OF TITLE, WHICH COULD FALL UNDER SECTION 2 (47) (V) AS HELD BY HON' BLE BOMBAY HIGH ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 4 OF 24 COURT IN THE CASE OF CHATURBHUJ DWARAKADAS KAPADIA V . CIT [2003] 2601TR 491/129 TAXMAN 497 . 3. LD, CIT (APPEALS) OUGHT TO HAVE CONSIDERED THE F ACT THAT THE IMPUGNED MOU IS A COMBINATION OF BOTH AGREEMENT TO SELL AND AGREEMENT TO DEVELOP; AND THAT ONCE THE AGREEMENT Q UESTION IS EXCUSED IN FAVOR OF THE RESPONDENT SOCIETY VENDOR:TRANSFEREE ) ,SOME RIGHT IN RESPECT OF THE SAID PROPERTY BELONGING TO THE VENDOR TO VENDOR HAD BEEN EXTINGUI SHED AND SOME RIGHT HAD BEEN CREATED IN FAVOR OF THE RESPONDENT S OCIETY, AS HELD BY HON' BLE SUPREME COURT IN THE CASE OF SH . SANJEEV LAL ECT VS COMMISSIONER OF INCOME TAX, CHANDIGHAR&ANR. IN CIVIL APPEAL NOS . 58995900 PF 2014 LARISING OUT OF SLP NOS . 16958-59 OF 2013 ) . THUS A RIGHT IN RESPECT OF THE CAPITAL ASS ET IN QUESTION HAD BEEN TRANSFERRED BY THE VENDOR IN FAVOR OF THE RESP ONDENT SOCIETY ON THE DATEOF THE TRIPARTITE AGREEMENT IN QUESTION.THU S, IN SUBSTANCE, THE AGREEMENT IN QUESTION MAKES BOTH THE RESPONDENT SOC IETY AND THE VENDOR AS 'OWNER' OF THE IMPUGNED PROPERTY AND THEN THE SAID 'OWNER' HAVE GIVEN THE SAID PROPERTY FOR 'DEVE LOPMENT' TO THE DEVELOPER . 4. LD.CIT APPEALS FAILED TO APPRECIATE THAT THE QUE STION AS TO WHETHERTHE SUBJECT CONTRACT WAS A `WORK CONTRACT 'W AS LARGELY ONE OF THE FACTS DEPENDING UPON TERMS OF CONTRACT ON PR OPER CONSTRUCTION OF TERMS AND CONDITIONS BETWEEN PARTIE S INCLUDING OBLIGATION CAST UPON THEM WHICH HAD TO BE DISCHARGE D UNDER CONTRACT. LD . CIT (APPEALS) SHOULD HAVE APPRECIATE D THE FACT THAT THE DEVELOPER WHO WAS PARTY TO THE MOU HAS ONLY AGR EED TO FACILITATE AND DEVELOP THE SITES AND AS SUCH THE EL EMENT OF TRANSFER OF LAND IN TRUE SENSE FROM DEVELOPERS TO RESPONDENT SOCIETY OR ITS MEMBERS IS NOT THERE . THERE IS NO ELEMENT OF 'SUPPLY' BY THE DEVELOPER. THUS, THE SUBJECT CONTRACT WAS A 'WORKS CONTRACT' BUT NOT SALE CONTRACT AND AS SUCH THE PROVISIONS OF SEC TION 194C ARE SQUARELY ATTRACTED IN THIS CASE . 5. THE CASE LAWS RELIED UPON BY THE RESPONDENTS VIZ ., CIT VS KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BLDG. COOPERATIVE SOCIETY IN ITA NO. 1260/2006 (HIGH COUR T OF KARNATAKA) AND ITO (TDS) VS M/S . KAUTILYA HOUSE BLDG CO -OPER ATIVE SOCIETY LTD ., IN ITA NO . 1324-1337/BANG/2015 DATE D 07-04- 2016 ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE, AS IN BOTH THE ABOVE CASES, THE DEVELOPER PROCURES THE LA ND, DEVELOPED IT INTO SITES AND THEN REGISTERED THEM TO THE MEMBERS OF THE SOCIETY; WHEREAS IN THE PRESENT CASE THE DEV ELOPER HAS ONLY FACILITATED AND DEVELOPED THE PROPERTY INTO RE SIDENTIAL SITES AND NEVER TRANSFERRED THEM TO THE MEMBERS . ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 5 OF 24 6. WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEAL , IT IS SUBMITTED THAT A CONTRACT COMPRISING BOTH 'WORKS CO NTRACT' AND `TRANSFER OF IMMOVABLE PROPERTY' , DOES NOT DENUDE IT OF ITS CHARACTER AS 'WORKS CONTRACT' AS HELD BY THE FIVE J UDGE CONSTITUTION BENCH O9F HON' BLE SUPREME COURT IN TH E RECENT CASE OF KONE ELEVATOR INDIA PVT . LTD ., VS STATE OF ANDHRA PRADESH (2014-TIOL-57-SC-CT-CB), WHERE THE ISSUE BEFORE THE HON'BLE SUPREME COURT WAS WHETHER SUPPLY, ERECT ION, INSTALLATION AND COMMISSIONING OF LIFT OF CUSTOMER' S PREMISES CONSTITUTE 'CONTRACT FOR SALE OF GOODS' OR 'WORKS C ONTRACT'? 7. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED DU RING THE COURSE OF HEARING, IT IS PRAYED THAT THE ORDER PASS ED BY THE AO U/S . 201 (1) AND 201 (1A) BE UPHELD AND THE ORDER OF THE LD. CIT (APPEALS) MAY BE CANCELLED. 3. REGARDING THE GROUNDS RAISED BY THE ASSESSEE IN THE CO, WE ARE NOT REPRODUCING THE GROUNDS RAISED BY THE CO BECAUSE IN THE COURSE OF HEARING, LD. AR OF ASSESSEE SUBMITTED THAT THE ASSESSEE IS NOT P RESSING THESE COS FILED BY THE ASSESSEE AND HENCE, WE DISMISS ALL THE FOUR COS OF ASSESSEE AS NOT PRESSED. 4. REGARDING THE APPEALS FILED BY THE REVENUE IN RE SPECT OF THESE FOUR YEARS, FOR DELETION OF THE DEMANDS RAISED BY THE AO U/S. 201(1 ) AND U/S. 201(1A), THE LD. DR OF REVENUE SUBMITTED WRITTEN SUBMISSIONS WHICH A RE AS UNDER. 1. THE RESPONDENT IS A CO-OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF ALLOTTING HOUSING SITES TO ITS MEMBERS. IT ENTER ED INTO A TRIPARTITE AGREEMENT / MOU DATED 13.02.2008 WITH A DEVELOPER/ CONTRACTOR, M/S. RASARI DEVELOPERS AND A VENDOR, MR. YARLAGADDA VENKATESWARULU, FOR DEVELOPMENT OF A LAY OUT WHERE IN, - (I) THE VENDOR, BEING THE ABSOLUTE OWNER OF THE UN-CONV ERTED AGRICULTURAL LAND (THE PROPERTY), HAS CONSENTED FOR SELLING OF INDIVIDUAL SITES TO THE MEMBERS OF THE RESPONDENT H OUSING SOCIETY/ PURCHASER (II) THE DEVELOPER / CONTRACTOR AGREED TO DEVELOP THE PROPERTY BELONGING TO THE VENDOR INTO RESIDENTIAL S ITES, SO THAT THE VENDOR CAN DIRECTLY SELL/REGISTER THE SITES TO THE MEMBERS OF THE RESPONDENT SOCIETY (III) THE RESPONDENT HOUSING SOCIETY AGREED TO PURCHASE THE DEVELOPED SITES AT A FIXED PRICE PER SFT FROM T HE VENDOR AND PAID CERTAIN SUM IN PURSUANCE OF THE AGREEMENT (IV) THE VENDOR AUTHORIZED THE DEVELOPER TO NEGOTIATE ON HIS ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 6 OF 24 BEHALF WITH THE RESPONDENT / PURCHASER AND TO FORM THE LAYOUT CONSISTING OF RESIDENTIAL SITES (V) IT IS FURTHER AGREED BY THE VENDOR AND DEVELOPER TO PROCURE BALANCE LANDS ONLY IN THE NAME OF VENDOR OR HIS NOM INEES BY VIRTUE OF SALE DEEDS (VI) THE DEVELOPER FURTHER AGREED TO EXECUTE ANY 'ADDITI ONAL WORK' THAT MAY BE ENTRUSTED BY THE RESPONDENT SOCIE TY, OTHER THAN THOSE SPECIFIED UNDER THE SAID AGREEMENT 1.1 THE RELEVANT 'RECITAL' OF THE MOU IS REPRODUCED HEREUNDER : 'WHEREAS THE PURCHASER/ SOCIETY WHO ARE INTERESTED IN FORMING A RESIDENTIAL LAYOUT FOR DISTRIBUTION OF SI TES TO ITS MEMBERS ARE ON THE LOOKOUT FOR CONTIGUOUS STRETCH OF LANDS MEASURING ABOUT 40 ACRES (APPROXIMATELY 10,00,000 SQ FT (TEN LAKHS SQ.FT OF SITAL AREA) TO FORM A SELF CONTAINED LAYOUT. IN THIS REGA RD THE SAID SOCIETY WHO IS THE PURCHASER HEREIN HAS APPROACHED THE DEVELOPR HEREIN FOR PROCURING SUCH LANDS AND FORMIN G THE LAYOUT. THE DEVELOPER ACCORDINGLY HAS IDENTIFIED TH E SCHEDULE PROPERTIES FOR FORMATION OF THE LAYOUT FOR THE BENE FIT OF THE PURCHASER OR ITS MEMBERS HEREIN AND HAS FURTHER AGR EED TO PROCURE THE BALANCE EXTENT OF LANDS FROM THE ADJACE NT OWNERS TO FORM A CONTIGUOUS STRETCH OF LAND FOR FORMATION OF THE LAYOUT. IN RESPECT OF THE LANDS PRESENTLY AVAILABLE TO THE EXT ENT MENTIONED IN THE SCHEDULE HERE BELOW THE VENDOR HAS AUTHORIZED T HE DEVELOPER TO NEGOTIATE ON BEHALF WITH THE PURCHASER AND TO FORM THE LAYOUT CONSISTING OF RESIDENTIAL SITES AND THE VENDOR HAS THEREFORE CONSENTED FOR SELLING INDIVIDUAL SITE S TO THE MEMBERS OF THE PURCHASER SOCIETY WHO WOULD BE THE ASSIGNEE S/ NOMINEES OF THE PURCHASER / SOCIETY BEING ENTITLED TO PURCHASE OF THE SITE DEPENDING ON THE ALLOTMENT MAD E BY THE PURCHASER/ SOCIETY ' 'WHEREAS, THE VENDOR AND DEVELOPER HEREIN HAVE ALSO AGREED AND UNDERTAKEN TO PROCURE THE BALANCE EXTENT OF LANDS EITHER IN THE NAME OF THE VENDOR OR HIS NOMINEE/S BY VIRTU E OF REGISTERED SALE DEEDS AND GET THE SAME CONVERTED FOR RESIDENTI AL PURPOSE AT THE COST AND EXPENSES OF THE DEVELOPER. SUBSEQUENTLY, T HE PARTIES HEREIN SHALL ENTER INTO A SUPPLEMENTARY AGREEMENT I N ADDITION TO THIS AGREEMENT IF THE SAME IS FOUND NECESSARY AT A LATER POINT OF TIME.' (EMPHASIS SUPPLIED) 1.2 THE RELEVANT CLAUSES OF THE SAID TRIPARTITE AGR EEMENT ARE REPRODUCED HEREUNDER : '1. THE VENDOR AND THE DEVELOPER HEREIN HAVE AGREED TO FORM THE RESIDENTIAL LAYOUT IN THE SCHEDULE PROPERTIES F OR A SALE ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 7 OF 24 CONSIDERATION OF RS. 425/- (RUPEES FOUR HUNDRED AND TWENTY FIVE ONLY) PER SQ. FT. BEING THE COST OF THE SITE I NCLUDING THE EXPENSES FOR DEVELOPMENT OF THE LAYOUT 2. THAT THE PURCHASER HAS PAID A SUM OF RS. 25,00,0 0,000 (RUPEES TWENTY FIVE CRORES ONLY) IN THE FOLLOWING MANNER I) A SUM OF RS. 15,00,00,000/- (RUPEES FIFTEEN CRORES ONLY)BY WAY OF AN ACCOUNT PAYEE CHEQUE BEARING NO. 332667 D ATED 13.02.2008, DRAWN ON STATE BANK OF MYSORE, COOKE TO WN BRANCH BANGALORE II) A SUM OF RS. 5,00,00,000/- (RUPEES FIVE CRORES ONLY )BY WAY OF AN ACCOUNT PAYEE CHEQUE BEARING NO. 332668 DATED 13.03.2008, DRAWN ON STATE BANK OF MYSORE, COOKE TO WN BRANCH BANGALORE III) A SUM OF RS. 5,00,00,000/- (RUPEES FIVE CRORES ONLY )BY WAY OF AN ACCOUNT PAYEE CHEQUE BEARING NO. 332669 DATED 13.05.2008, DRAWN ON STATE BANK OF MYSORE, COOKE TO WN BRANCH BANGALORE THE SAID PAYMENT IS PAID IN FAVOUR OF THE DEVELOPER HEREIN ON THE INSTRUCTIONS OF THE VENDOR AS ADVANCE / SECU RITY DEPOSIT TOWARDS THE SALE CONSIDERATION. THEREFORE THE VENDO R IS NOT RECEIVING ANY SALE CONSIDERATION UNDER THE SALE DEE DS. 6. THAT THE VENDOR AS STATED ABOVE IS THE ABSOLUTE OWN ER OF THE SCHEDULE PROPERTIES AND IN THE EVENT, OF THEIR BEIN G ANY DEFECT IN THE TITLE OF THE VENDOR OVER ANY PORTION OF THE PRO PERTY THE SAME WOULD BE SET-RIGHT BY THE VENDOR / DEVELOPER AT THE IR OWN COST AND VENDOR / DEVELOPER WOULD EXTEND ALL CO-OPERATIO N TO THE PURCHASER OR THEIR NOMINEES IN COMPLETING THE TRANS ACTION. 7. IF A GOOD AND MARKETABLE TITLE IS MADE OUT AND THE PROPERTY IS FOUND TO BE FREE FROM ENCUMBRANCES, ATTACHMENTS, CH ARGES AND OTHER CLAIMS AND DEMANDS AND NOT EFFECTED BY ANY NO TICE OR SCHEME OF ACQUISITION OR REQUISITION, THE VENDOR SH ALL EXECUTE A PROPER CONVEYANCE IN FAVOUR OF THE PURCHASER OR THE IR NOMINEES AS CONVERTED LAND, HOUSE SITE BASISSUBJECT TO THE P AYMENT TERMS STATED IN PARA 4 ABOVE. THE VENDOR AND DEVELOPER SH ALL BEAR AND PAY ALL OUTGOING LIABILITIES ON THE SCHEDULE PROPERTIES UP TO REGISTRATION OF THE SCHEDULE PROPERTY. 10. THE DEVELOPER HEREIN AS A PART OF THE DEVELOPME NT PACKAGE, SHALL BE RESPONSIBLE TO ENSURE CLEAR, VALID, SUBSISTING, MAR KETABLE, ENFORCEABLE TITLE IN REGARD TO THE SCHEDULE PROPERT Y ALONG WITH VENDOR. THE VENDOR SHALL ENSURE AND SATISFY THE PUR CHASER THAT THE SCHEDULE PROPERTY IS FREE FROM ALL ENCUMBRANCES OF WHATSOEVER NATURE, THAT THERE IS ABSOLUTE OWNERSHIP WITH POWER OF ALIENATION AND DISPOSAL OVER THE SCHEDULE PROPERTIES. ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 8 OF 24 14. THE DEVELOPER SHALL BE RESPONSIBLE TO APPROACH VARIOUS STATUTORY AUTHORITIES, TO SECURE NOC FOR PURPOSE OF SECURING THE PLAN SANCTION FROM THE COMPETENT AUTHORITY SUCH AS WATER SUPPLY A ND SEWAGE BOARDS, ELECTRICAL BOARD, POLLUTION CONTROL BOARD AND SUCH OTHER STATUTORY AUTHORITIES, GOVERNMENTAL, SEMI-GOVERNMENTAL ETC. T O SECURE THE PLAN SANCTION. 17. THE EXPENSES OF STAMP DUTY FOR REGISTRATION OF INDIVIDUAL SITES SHALL BE BORNE EXCLUSIVELY BY THE PURCHASER SOCIETY'S ALL OTTEE MEMBERS OR THEIR NOMINEE/S. THE VENDOR HAS NO OBJECTION FOR TH E PURCHASER / SOCIETY REGISTERING THE INDIVIDUAL SITES, IN FAVOUR OF ITS MEMBERS. 18. THAT IN THE EVENT OF THE VENDOR HEREIN REQUESTI NG THE PURCHASER TO MAKE ANY PAYMENTS, TO GOVERNMENTAL AGENCIES OR T O ANY OTHER PERSONS SUCH AS, FOR CONVERSION CHARGES, KEB CHARGE S, BETTERMENT CHARGES TO CMC AND TO THE LAND OWNERS ETC., THE PUR CHASER SHALL MAKE SUCH PAYMENT DIRECTLY TO SUCH AUTHORITIES AND ANY SUCH PAYMENT MADE SHALL BE ADJUSTED TOWARDS THE SALE PRI CE AGREED ABOVE. 19. THE DEVELOPER AGREES TO EXECUTE ANY ADDITIONAL WORK THAT MAY BE ENTRUSTED BY THE SOCIETY OTHER THAN THOSE SPECIFIED UNDER THIS AGREEMENT AT RATES AND UPON TERMS AND CONDITIONS TH AT MAY BE MUTUALLY AGREED UPON FROM TIME TO TIME. (EMPHASIS SUPPLIED) 1.3 THE RELATION BETWEEN THE SAID FOUR CATEGORIES O F PERSONS, VIZ., VENDOR, DEVELOPER, RESPONDENT HOUSING SOCIETY, AND ITS MEMBERS; IS PICTORIALLY DEPICTED IN ANNEXURE 1. AS CAN BE SEE N FROM THE ENTIRE SCHEME OF THINGS; THE DEVELOPER IS ENGAGED IN THE C ONTRACT OF DEVELOPING THE UM-CONVERTED AGRICULTURAL LAND BELON GING TO THE VENDOR INTO FULLY CONVERTED HOUSING SITES BY PERFOR MING A SERIES OF ACTS LIKE LAND CONVERSION, PLAN SANCTIONS, OBTAININ G APPROVALS FROM VARIOUS AUTHORITIES AND FINALLY DEVELOPMENT OF THE LAND INTO A LAYOUT, APART FROM ACTING AS A FACILITATOR BETWEEN THE VEND OR AND THE RESPONDENT. THE DEVELOPER PASSES ON THE PAYMENTS RE CEIVED FROM THE RESPONDENT TO THE VENDOR TOWARDS THE LAND COST, AFTER RETAINING ITS CONTRACT FEE. 2. IT IS RESPECTFULLY SUBMITTED THAT FROM THE MOU I N QUESTION, IT IS CLEAR THAT, - AT NO POINT IN TIME THE DEVELOPER / CONTRACTOR IS T HE OWNER OF THE UN-CONVERTED LAND (PROPERTY) OR THE FULLY DEVELOPED HOUSING SITES THE VENDOR IS THE ABSOLUTE OWNER OF THE PROPERTY AL L THE TIME, AND THE VENDOR SHALL REGISTER / TRANSFER FULLY DEVELOPE D HOUSING SITES DIRECTLY TO THE RESPONDENT SOCIETY OR ITS MEMBERS ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 9 OF 24 2.1 THE ASSESSING AUTHORITY HAS RECORDED THE ABOVE FINDING IN PARA 2, PAGE NO. 4 OF HISORDER U/S. 201(1) OF THE INCOME-TA X ACT, 1961. RELEVANT PORTION IS EXTRACTED AS UNDER : 'AS MENTIONED EARLIER THE DEVELOPER M/S. RASASRI DEVELOPERS DOESN'T OWN ANY LAND AS ON DATE OF THE AGREEMENT/MOU WITH THE SOCIETY. EVEN AFTERWARDS THE DEVELOPER DOESN'T ACQUIRE ANY LAND IN ITS NAME AND TRANSFER T HE SAME IN THE NAME OF THE SOCIETY. AFTER NEGOTIATION WITH THE LAN DLORDS PAYMENTS ARE MADE BY THE DEVELOPER TO THE LANDLORDS FOR PROCUREMENT OF PROPERTY AND THE SAME IS DEVELOPED I NTO A LAYOUT BY DOING CIVIL WORKS SUCH AS LYING OF DRAINS, ROAD, ERECTION OF ELECTRIC POLES ETC. AND THE SAME IS REGISTERED IN T HE NAME OF MEMBERS OF THE SOCIETY. AS SUCH THE ROLE OF THE DE VELOPER IS OF A CONTRACTOR TO FACILITATE PROCUREMENT OF LAND AND DE VELOP THE SAME INTO RESIDENTIAL LAYOUT BY CARRYING OUT CIVIL WORKS ON THE LAND AFTER CONVERTING THE SAME FROM AGRICULTURE TO NON AGRICULTURE IN THE NAME OF THE LANDLORDS THEN REGI STER IN THE NAME OF MEMBERS OF THE SOCIETY. HENCE, THIS AGREEM ENT / MOU BETWEEN THE SOCIETY AND THE DEVELOPER CANNOT BE TER MED AS CONTRACT FOR SALE AS THERE IS NO TRANSFER OF CHATTE L QUA CHATTEL.' (EMPHASIS SUPPLIED) 3. THE IMPUGNED MOUCONFIRM THE PRIVILEGES OF OWNE RSHIP ON RESPONDENT SOCIETY WITHOUT TRANSFER OF TITLE: IN THE INSTANT CASE, THE VENDOR HAS UNDERTAKEN TO S ELL THE DEVELOPED SITES TO THE SOCIETY OR ITS MEMBERS AT A FIXED PRICE AND THE RESPONDENT HOUSING SOCIETY / PURCHASER HAS AGRE ED TO PURCHASE THE SITES AND PAID CERTAIN SUM (CLAUSE 3 O F THE AGREEMENT) IN PURSUANCE OF THE AGREEMENT. ALL THESE INGREDIENTS / ARRANGEMENTS ENSHRINED IN THE IMPUGNED AGREEMENT, R EAD AS A WHOLE, CONFIRM THE PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TITLE ON THE RESPONDENT, THAT COULD FALL UNDER SECTION 2( 47)(V). UNDER SECTION 2(47)(V), ANY TRANSACTION INVOLVING ALLOWIN G OF POSSESSION TO BE TAKEN OVER OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER O F PROPERTY ACT WOULD COME WITHIN THE AMBIT OF SECTION 2(47)(V). TH AT, IN ORDER TO ATTRACT SECTION 53A, THE FOLLOWING CONDITIONS NEED TO BE FULFILLED. THERE SHOULD BE A CONTRACT FOR CONSIDERATION; IT SH OULD BE IN WRITING; IT SHOULD BE SIGNED BY THE TRANSFEROR; IT SHOULD PERTAIN TO TRANSFER OF IMMOVABLE PROPERTY; THE TRANSFEREE SHOU LD HAVE TAKEN POSSESSION OF THE PROPERTY; LASTLY, THE TRANSFEREE SHOULD BE READY AND WILLING TO PERFORM HIS PART OF THE CONTRACT. TH AT EVEN ARRANGEMENTS CONFIRMING PRIVILEGES OF OWNERSHIP WIT HOUT TRANSFER OF TITLE COULD FALL UNDER SECTION 2(47)(V). SECTION 2(47)(V) WAS INTRODUCED IN THE ACT FROM THE ASSESSMENT YEAR 1988 -89 BECAUSE PRIOR THERETO, IN MOST CASES, IT WAS ARGUED ON BEHA LF OF THE ASSESSEE THAT NO TRANSFER TOOK PLACE TILL EXECUTION OF THE C ONVEYANCE.... AND TO ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 10 OF 24 PLUG THAT LOOPHOLE, SECTION 2(47)(V) CAME TO BE INT RODUCED IN THE ACT (HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATU RBHUJ DWARKADASKAPADIA V. CIT [2003] 260 ITR 491 / 129 TA XMAN 497). 4.LAND IS DEEMED TO BE TRANSFERRED TO THE RESPOND ENT SOCIETY ON THE DATE OF THE IMPUGNED AGREEMENT : FROM THE RECITALS AND VARIOUS CLAUSES OF THE MOU REPRODUCED IN THE ABOVE PARAS, IT IS CLEAR THAT THE IMPUGNED MOU IS A COMBINATION OF BOTH 'AGREEMENT TO SELL' AND 'A GREEMENT TO DEVELOP'. ONCE AN AGREEMENT TO SELL IS EXECUTED IN FAVOUR OF ONE PERSON, THE SAID PERSON GETS A RIGHT TO GET THE PRO PERTY TRANSFERRED IN HIS FAVOUR BY FILING A SUIT FOR SPECIFIC PERFORM ANCE AND THEREFORE, WITHOUT HESITATION WE CAN SAY THAT SOME RIGHT, IN R ESPECT OF THE SAID PROPERTY, BELONGING TO THE LANDLORD (VENDOR) HAD BE EN EXTINGUISHED AND SOME RIGHT HAD BEEN CREATED IN FAVOUR OF THE RE SPONDENT SOCIETY (VENDEE/TRANSFEREE), WHEN THE AGREEMENT IN QUESTION HAD BEEN EXECUTED. SIMILAR VIEW IS EXPRESSED BY SUPREME COURT IN THE CASE OF SH. SANJEEV LAL ETC. VS. COMMISSIONER OF IN COME TAX, CHANDIGARH &ANR. IN CIVIL APPEAL NOS.5899-5900 OF 2 014 (ARISING OUT OF SLP (C) NOS.16958-59 OF 2013). RELE VANT EXTRACTS OF THE JUDGEMENT OF THE HON'BLE SUPREME COURT ARE AS U NDER : 'IN NORMAL CIRCUMSTANCES BY EXECUTING AN AGREEMENT TO SELL IN RESPECT OF AN IMMOVEABLE PROPERTY, A RIGHT IN PE RSONAM IS CREATED IN FAVOUR OF THE TRANSFEREE/VENDEE. WHEN SU CH A RIGHTIS CREATED IN FAVOUR OF THE VENDEE, THE VENDOR IS REST RAINED FROM SELLING THE SAID PROPERTY TO SOMEONE ELSE BECAUSE T HE VENDEE, IN WHOSE FAVOUR THE RIGHT IN PERSONAM IS CREATED, HAS A LEGITIMATE RIGHT TO ENFORCE SPECIFIC PERFORMANCE OF THE AGREEM ENT, IF THE VENDOR, FOR SOME REASON IS NOT EXECUTING THE SALE D EED. THUS, BY VIRTUE OF THE AGREEMENT TO SELL SOME RIGHT IS GIVEN BY THE VENDOR TO THE VENDEE. THE QUESTION IS WHETHER THE ENTIRE P ROPERTY CAN BE SAID TO HAVE BEEN SOLD ATTHE TIME WHEN AN AGREEMENT TO SELL IS ENTERED INTO. IN NORMAL CIRCUMSTANCES, THE AFORESTA TED QUESTION HAS TO BE ANSWERED IN THE NEGATIVE. HOWEVER, LOOKIN G AT THE PROVISIONS OF SECTION 2(47) OF THE ACT, WHICH DEFIN ES THE WORD 'TRANSFER' IN RELATION TO A CAPITAL ASSET, ONE CAN SAY THAT IF A RIGHT IN THE PROPERTY IS EXTINGUISHED BY EXECUTION OF AN AGREEMENT TO SELL, THE CAPITAL ASSET CAN BE DEEMED TO HAVE BEEN TRANSFERRED.' 'IN THE LIGHT OF THE AFORESTATED FACTS AND IN VIEW OF THE DEFINITION OF THE TERM 'TRANSFER', ONE CAN COME TO A CONCLUSION THAT SOME RIGHT IN RESPECT OF THE CAPITAL ASSET IN QUES TION HAD BEEN TRANSFERRED IN FAVOUR OF THE VENDEE AND THEREFORE, SOME RIGHT WHICH THE APPELLANTS HAD, IN RESPECT OF THE CAPITAL ASSET IN QUESTION, HAD BEEN EXTINGUISHED BECAUSE AFTER EXECUTION OF THE A GREEMENT TO SELL IT WAS NOT OPEN TO THE APPELLANTS TO SELL THE PROPERTY TO SOMEONE ELSE ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 11 OF 24 IN ACCORDANCE WITH LAW. A RIGHT IN PERSONAM HAD BEE N CREATED IN FAVOUR OF THE VENDEE, IN WHOSE FAVOUR THE AGREEMENT TO SELL HAD BEEN EXECUTED AND WHO HAD ALSO PAID RS.15 LAKHS BY WAY O F EARNEST MONEY. NO DOUBT, SUCH CONTRACTUAL RIGHT CAN BE SURR ENDERED OR NEUTRALIZED BY THE PARTIES THROUGH SUBSEQUENT CONTR ACT OR CONDUCT LEADING TO NO TRANSFER OF THE PROPERTY TO THE PROPO SED VENDEE BUT THAT IS NOT THE CASE AT HAND.' (EMPHASIS SUPPLIED) THUS, A RIGHT IN RESPECT OF THE CAPITAL ASSET, VIZ. THE UN- CONVERTED AGRICULTURAL LAND IN QUESTION HAD BEEN TR ANSFERRED BY THE LANDLORD IN FAVOUR OF THE RESPONDENT SOCIETY ON THE DATE OF THE TRIPARTITE AGREEMENT IN QUESTION. THUS, IN SUBSTANC E, THE AGREEMENT IN QUESTION MAKES BOTH THE RESPONDENT SOCIETY AND THE LANDLORD AS THE 'OWNERS' WITH RESPECT TO THE PROPERTY IN QUEST ION AND THEN THE SAID 'OWNERS' HAVE GIVEN THE SAID PROPERTY FOR DEVE LOPMENT TO THE DEVELOPER. 5. WORK ON VENDOR'S OWN ACCOUNT : AS RIGHTLY POINTED OUT BY THE RESPONDENT IN PARA 5 (A) OF ITS CROSS OBJECTIONS, THE VENDOR OF THE PROPERTY WOULD BE ABSOLUTE OWNER OF SUCH PROPERTY AND NOT THE RESPONDENT. HEN CE, THE WORK INVOLVED IS ON VENDOR'S OWN ACCOUNT. HOWEVER, ON TH E DATE OF AGREEMENT, OUT OF A BUNDLE OF RIGHTS, FEW RIGHTS HA VE BEEN TRANSFERRED TO THE RESPONDENT SOCIETY IN THE FORM O F LIMITED OWNERSHIP FROM THE VENDOR. THE ROLE OF THE DEVELOPE R IS ONLY FACILITATION AND DEVELOPMENT OF THE LAYOUT. THUS, I T CANNOT BE SAID THAT THE DEVELOPER HAS 'UNDERTAKEN TO SUPPLY ANY AR TICLE OR THING FABRICATED ACCORDING TO THE SPECIFICATIONS GIVEN' B Y THE SOCIETY. IN THE INSTANT CASE, THERE IS NO ELEMENT OF 'SUPPLY' B Y THE DEVELOPER. THUS, CBDT CIRCULAR NO. 681 DATED 8-3-1994 REFERRED BY THE RESPONDENT IN PARA 5(B) OF THE CROSS OBJECTIONS HAS NO APPLICATION IN THE INSTANT CASE. 6. ENGAGEMENT OF DEVELOPER AS PER THE AGREEMENT IS A 'WORKS CONTRACT' : 6.1 THE MAIN OR DOMINANT PURPOSE OF 'ENGAGEMENT' OF DEVELOPER IN THIS CASE IS TO DEVELOP THE HOUSING SITES. ALL OTHE R ACTIVITIES ARE EITHER SUPPLEMENTARY OR SUBORDINATE TO SUCH DEVELOP MENTAL ACTIVITY. SO, IT IS THE DOMINANT OBJECT WHICH WOULD DETERMINE THE NATURE OF THE CONTRACT. IF THE DOMINANT OBJECT IS TO TRANSFER THE CHATTEL AS CHATTEL THEN IT WOULD BE A CONTRACT OF SALE EVEN TH OUGH GOODS MIGHT HAVE BEEN MANUFACTURED AS PER THE REQUIREMENT AND S PECIFICATION OF THE CLIENT. ON THE OTHER HAND, IF THE DOMINANT OBJE CT IS TO CARRY OUT A WORK, IT WOULD BE A WORKS CONTRACT EVEN THOUGH SO ME MATERIAL MIGHT HAVE BEEN USED IN THE EXECUTION OF THE CONTRA CT. IN SUCH CASES, SECTION 194C WOULD BE ATTRACTED AS HELD BY H ON'BLE SUPREME COURT IN THE CASE OF STATE OF HIMACHAL PRADESH VS. ASSOCIATED HOTELS, AIR 1972 SC 1131; [1972] 29 STC 474 (SC). W HEN THIS TEST ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 12 OF 24 IS APPLIED IN THE PRESENT CASE, IT IS CLEAR THAT TH E DOMINANT OBJECT IS TO CARRY OUT THE DEVELOPMENT WORK ON THE LAND BELON GING TO THE VENDOR AND AS SUCH IT IS A WORKS CONTRACT AND PROVI SIONS OF SECTION 194C ARE CLEARLY ATTRACTED. 6.2THE PREDOMINANT ACTIVITY OF DEVELOPER IN THIS CA SE IS IN THE NATURE OF 'WORKS CONTRACT' AS HELD BY HON'BLE SUPREME COUR T IN THE RECENT JUDGEMENT IN THE CASE OF LARSEN & TOUBRO &ANR. VS. STATE OF KARNATAKA &ANR. [CIVIL APPEAL NO. 8672 OF 2013 (ARI SING OUT OF SLP(C) NO.17741 OF 2007)], IN WHICH THE APEX COURT HAS UPHELD THE LEVY OF VAT BY THE STATES ON THE SALE OF FLATS WHIC H ARE UNDER CONSTRUCTION, AS IT AMOUNTS TO WORKS CONTRACT. THE MATTER IN THE L&T CASE (SUPRA) WAS REFERRED TO A LARGER BENCH OF THE SUPREME COURT FOR RE-CONSIDERATION OF THE DECISION OF THE DIVISIO N BENCH IN THE CASE OF K. RAHEJA DEVELOPMENT CORPORATION VS. STATE OF K ARNATAKA [(2005) 5 SCC 162]. THE VIEW TAKEN IN THE K. RAHEJA CASE WAS REFERRED FOR CONSIDERATION OF THE FOLLOWING ISS UES: WHETHER THE TRIPARTITE AGREEMENT COULD BE CONSIDERE D AS WORKS CONTRACT? IF THE RATIO OF THE DECISION IN THE K. RAHEJA CASE WAS ACCEPTED, THERE WOULD BE NO DIFFERENCE BETWEEN A WORKS CONTRA CT AND A SALE OF CHATTEL AS A CHATTEL. CAN THE DEVELOPER BE SAID TO BE A CONTRACTOR FOR TH E PROSPECTIVE FLAT PURCHASER? 6.3WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEAL , IT IS SUBMITTED THAT A CONTRACTCOMPRISING BOTH 'WORKS CONTRACT' AND 'TRANSFER OF IMMOVABLE PROPERTY', DOES NOT DENUDE IT OF ITS CHAR ACTER AS 'WORKS CONTRACT' AS HELD BY THE FIVE JUDGE CONSTITUTION BE NCH OF THE HON'BLE SUPREME COURT IN THE RECENT CASE OF KONE EL EVATOR INDIA PRIVATE LIMITED VS. STATE OF ANDHRA PRADESH [2014-T IOL-57-SC- CT-CB], WHERE THE ISSUE BEFORE THE HON'BLE SUPREME COURT WAS WHETHER SUPPLY, ERECTION, INSTALLATION AND COMMISSI ONING OF LIFT AT CUSTOMER'S PREMISES CONSTITUTE 'CONTRACT FOR SALE O F GOODS' OR 'WORKS CONTRACT'? 7.PRESENT CONTRACT IS SQUARELY COVERED U/S 194C : 7.1WHETHER THE SUBJECT CONTRACT WAS A WORKS CONTRAC T OR SALE CONTRACT WASLARGELY ONE OFFACT DEPENDING UPON TERMS OF CONTR ACT ON PROPER CONSTRUCTION OF TERMS AND CONDITIONS BETWEEN PARTIE S INCLUDING OBLIGATION CAST UPON THEM WHICH HAD TO BE DISCHARGE D UNDER CONTRACT (MANI MUTHUSARNYV.PERSONAL ASSISTANT TO THE COLLECT OR*T.S. SIVAGNANAM, J. [2010] 328 ITR 588 (MADRAS). 7.2FROM THE ARRANGEMENTS MADE IN THE TRIPARTITE AGR EEMENT BETWEEN THE RESPONDENTSOCIETY, DEVELOPER AND THE VENDOR IT IS CLEAR THAT IT IS ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 13 OF 24 A COMBINATION OF 'CONTRACT FOR SALE' AND `CONTRACT FOR WORK'. THERE IS NO DISPUTE THAT WORKS CONTRACT (INCLUDING JOB WO RK) ARE COVERED WITHIN THE SCOPE OF SECTION 194C OF THE ACT. BUT TH ERE HAS ALWAYS BEEN DISPUTE BETWEEN THE TAX PAYERS AND THE DEPARTM ENT WHETHER A PARTICULAR CONTRACT IS A WORKS CONTRACT OR CONTRACT OF SALE. THE HON'BLE SUPREME COURT HAS DECIDED SUCH ISSUE IN MAN Y CASES. IT WOULD BE APPROPRIATE TO REFER THE DECISION IN THE C ASE OF STATE OF HIMACHAL PRADESH VS. ASSOCIATED HOTELS, AIR 1972 SC 1131; [1972] 29 STC 474 (SC) WHEREIN THE COURT OBSERVED I N PARA 9 AS UNDER:- 'THE DIFFICULTY WHICH THE COURTS HAVE OFTEN TO MEET WITH IN CONSTRUING A CONTRACT OF WORK AND LABOUR, ON THE ON E HAND, AND A CONTRACT FOR SALE, ON THE OTHER, ARISES BECAUSE THE DISTINCTION BETWEEN THE TWO IS VERY OFTEN A FINE ONE. THIS IS PARTICULA RLY SO WHEN THE CONTRACT IS A COMPOSITE ONE INVOLVING BOTH A CONTRA CT OF WORK AND LABOUR AND A CONTRACT OF SALE. NEVERTHELESS, THE D ISTINCTION BETWEEN THE TWO RESTS ON A CLEAR PRINCIPLE. A CONTRACT OF S ALE IS ONE WHOSE MAIN OBJECT IS THE TRANSFER OF PROPERTV IN, AND THE DELIVERY OF THE POSSESSION OF A CHATTEL AS A CHATTEL TO THE BUYER. WHERE THE PRINCIPAL OBJECT OF WORK UNDERTAKEN BY THE PAYEE OF THE PRIC E IS NOT THE TRANSFER OF A CHATTEL QUA CHATTEL, THE CONTRACT IS ONE OF WORK AND LABOUR. THE TEST IS WHETHER OR NOT THE WORK AND LAB OUR BESTOWED END IN ANYTHING THAT CAN PROPERLY BECOME THE SUBJECT OF SALE; NEITHER THE OWNERSHIP OF MATERIALS, NOR THE VALUE OF THE SKILL AND LABOUR AS COMPARED WITH THE VALUE OF THE MATERIALS, IS CONCLU SIVE, ALTHOUGH SUCH MATTERS MAY BE TAKEN INTO CONSIDERATION IN DET ERMINING, IN THE CIRCUMSTANCES OF A PARTICULAR CASE, WHETHER THE CON TRACT IS IN SUBSTANCE ONE FOR WORK AND LABOUR OR ONE FOR THE SA LE OF A CHATTEL.' 'FROM THE DECISIONS EARLIER CITED IT CLEARLY EMERGE S THAT SUCH DETERMINATION DEPENDS IN EACH CASE UPON ITS FACTS A ND CIRCUMSTANCES. MERE PASSIM; OF PROPERTY IN AN ARTICLE OR COMMODITY DURING THE COURSE OF THE PERFORMANCE OF THE TRANSACTION IN QUE STION DOES NOT RENDER IT A TRANSACTION OF SALE. FOR, EVEN IN A CON TRACT PURELY OF WORK OR SERVICE, IT IS POSSIBLE THAT ARTICLES MAY HAVE T O BE USED BY THE PERSON EXECUTING THE WORK AND PROPERTY IN SUCH ART ICLES OR MATERIALS MAY PASS TO THE OTHER PARTY. THAT WOULD NOT NECESS ARILY CONVERT THE CONTRACT INTO ONE OF SALE OF THOSE MATERIALS. IN E VERY CASE THE COURT WOULD HAVE TO FIND OUT WHAT WAS THE PRIMARY OBJECT OF THE TRANSACTION AND THE INTENTION OF THE PARTIES WHILE ENTERING IN TO IT.....' (EMPHASIS SUPPLIED) A CONTRACT FOR SALE HAS HENCE TO BE DISTINGUISHED F ROM A CONTRACT OF WORK. WHETHER A PARTICULAR AGREEMENT FALLS WITHIN ONE OR THE OTHER CATEGORY DEPENDS UPON THE OBJECT AND INTENT OF THE PARTIES, AS EVIDENCED BY THE TERMS OF THE CONTRACT, THE CIRCUMSTANCES IN WHICH IT WAS ENTERED INTO AND THE CUSTOM OF THE TRADE. THE SUBSTANCE OF THE MATTER AN D NOT THE FORM IS WHATIS OF IMPORTANCE. IN THE PRESENT CASE, THE RESPONDENT HOUSING SOCIETY ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 14 OF 24 ENTERED INTO A TRIPARTITE AGREEMENT WITH BOTH THE D EVELOPER AND LANDLORD; AND THE TRANSACTION CAN BE REGARDED AS TR ANSFER OF PROPERTY U S 2(47)(V) BETWEEN THE RESPONDENT SOCIET Y AND LANDLORD. HERE, BOTH THE LANDLORD AND RESPONDENT SOCIETY JOIN TLY CONSTITUTE THE 'OWNER' OF THE PROPERTY. SINCE CERTAIN RIGHTS OF ON E HAVE PASSED TO THE OTHER AS HELD BY HON'BLE SUPREME COURT IN THE C ASE OF SH. SANJEEV LAL ETC. VS. COMMISSIONER OF INCOME TAX, CH ANDIGARH &ANR. (SUPRA), IT CAN BE SAID THAT BOTH THESE PARTI ES HAVE JOINTLY GIVEN THE LAND FOR DEVELOPMENT TO THE DEVELOPER. IN SUCH A SCENARIO, THE DOMINANT ROLE OF THE DEVELOPER IS THE DEVELOPME NT OF HOUSING SITES, WHICH CONSTITUTES A JOB WORK OR WORKS CONTRA CT. THUS, THE PAYMENTS FROM RESPONDENT TO THE DEVELOPER WILL BE C AUGHT IN THE MISCHIEF OF SUB-SECTION (1) OF SECTION 194C. 8. CASE LAWS RELIED UPON BY THE RESPONDENT (PARA 8 OF CROSS OBJECTIONS) : THE FACTS OF THE FOLLOWING CASES RELIED UPON BY THE RESPONDENT ARE SIGNIFICANTLY DIFFERENT FROM THOSE OF THE INSTANT C ASE AND HENCE CANNOT BE RELIED UPON. 8.1 CIT VS. KARNATAKA STATE JUDICIAL DEPARTMENT EMP LOYEES HOUSE BLDG. CO-OPERATIVE SOCIETY IN ITA NO.1260/20 06 (HIGH COURT OF KARNATAKA): IN THIS CASE, THE RESPONDENT C O-OPERATIVE SOCIETY ENTERED INTO AN AGREEMENT WITH ONE MR. LAKS HMAN (DEVELOPER) TO PURCHASE THE SITES FROM OUT OF THE L AYOUT FORMED BY MR. LAKSHMAN. IN THIS CASE, SINCE THE RESPONDENT SOCIETY WAS ONLY A PURCHASER, HON'BLE HIGH COURT OF KARNATAKA H ELD THAT THERE WAS NO NEED FOR DEDUCTION OF TAX AT SOURCE ON THE ADVANCES PAID TO THE DEVELOPER. 8.2ITO (TDS) VS. M/S.KAUTILYA HOUSE BLDG. CO- OPERATIVESOCIETYLTD. ITA NO.1324-1337/BANG/2015 DAT ED 07-04- 2016: IN THIS CASE, THE RESPONDENT CO-OPERATIVE SOC IETY ENTERED INTO AN AGREEMENT WITH ONLY THE DEVELOPER FOR PURCHASE O F DEVELOPED HOUSE SITES. THE DEVELOPER PROCURED THE LAND, DEVEL OPED IT INTO SITES AND THEN REGISTERED THEM TO THE MEMBERS OF TH E SOCIETY. AFTER PERUSING THE AGREEMENT DATED 11/4/2005 ENTERED INTO BY THE RESPONDENT-CO-OPERATIVE SOCIETY WITH ONE SHRI LAKSH MAN (DEVELOPER) AS WELL AS THE SALE DEED ENTERED INTO B Y SHRI LAKSHMAN WITH MEMBERS OF THE SOCIETY ON 27/8/2014, HON'BLE ITAT HELD THAT IT IS A CASE OF SALE OF DEVELOPED SITES O F THE DEVELOPER TO INDIVIDUAL MEMBERS OF THE CO-OPERATIVE SOCIETY. IN BOTH THE ABOVE CASES, THE DEVELOPER TRANSFERRED THE HOUSING SITES DIRECTLY TO THE MEMBERS OF THE HOUSIN G SOCIETY; WHEREAS IN THE PRESENT CASE, THE DEVELOPER HAS DEVELOPED TH E LAYOUT AND THE LANDLORD REGISTERED THE SITES TO THE MEMBERS OF THE HOUSING SOCIETY. THUS, IN THE ABOVE CASES, TRANSFER TOOK PLACE BETWE EN THE HOUSING SOCIETY AND THE DEVELOPER; WHEREAS IN THE PRESENT C ASE THE TRANSFER ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 15 OF 24 TOOK PLACE BETWEEN THE HOUSING SOCIETY AND THE LAND LORD (WHO IS DIFFERENT FROM THE DEVELOPER). 9. THE APPELLANT, IN THE LIGHT OF THE FACTS OF THE CASE, PRAYS THIS HON'BLE TRIBUNAL TO HOLD,- A) THAT ALL THESE ARRANGEMENTS IN THE IMPUGNED MOU, RE AD AS A WHOLE, CONFIRM THE PRIVILEGES OF OWNERSHIP ON RESPO NDENT SOCIETY WITHOUT TRANSFER OF TITLE, WHICH COULD FALL UNDER SECTION 2(47)(V); B) THAT THE SUBJECT CONTRACT WAS A 'WORKS CONTRACT' BU T NOT 'SALE CONTRACT' AS THERE IS NO ELEMENT OF 'TRANSFER' BETW EEN THE DEVELOPER AND THE RESPONDENT SOCIETY; C) THAT THE WORKS TO BE CARRIED OUT BY THE DEVELOPER A S PER THE MOU LIKE PROCURING THE LAND, DEVELOPING, CONVERSION , PLAN FOR APPROVAL, DRAINAGE, CULVERTS, LAYING ROADS ETC. ARE IN THE NATURE OF 'WORK', WHICH ATTRACT THE PROVISIONS OF SECTION 194C; D) THAT THE IMPUGNED MOU BETWEEN THE RESPONDENT SOCIET Y, DEVELOPER AND THE VENDOR, TO THE EXTENT APPLICABLE TO THE DEVELOPER, IS IN THE NATURE OF COMPOSITE CONTRACT F OR WORKS, FOR WHICH THE PROVISIONS OF SECTION 194C ARE APPLIC ABLE; E) WITHOUT PREJUDICE TO THE ABOVE, TO HOLD THAT A CONT RACT COMPRISING BOTH 'WORKS CONTRACT' AND 'TRANSFER OF I MMOVABLE PROPERTY', DOES NOT DENUDE IT OF ITS CHARACTER AS ' WORKS CONTRACT' AS HELD BY BY THE FIVE JUDGE CONSTITUTION BENCH OF THE HON'BLE SUPREME COURT IN THE RECENT CASE OF KON E ELEVATOR INDIA PRIVATE LIMITED VS. STATE OF ANDHRA PRADESH [2014-TIOL-57-SC-CT-CB] ; F) GRANT SUCH OTHER RELIEF AS THIS HON'BLE TRIBUNAL DE EMS FIT AND PROPER UNDER THE FACTS AND CIRCUMSTANCES OF THE CAS E. 10.IN THE LIGHT OF ABOVE ARGUMENTS, THE APPELLANT P RAYS THIS HON'BLE TRIBUNAL TO ALLOW THIS APPEAL IN FAVOUR OF REVENUE FOR THE ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE. 5. HE ALSO PLACED RELIANCE ON A JUDGEMENT OF HONBL E APEX COURT RENDERED IN THE CASE OF SHRI SANJEEV LAL ETC. ETC. VS. CIT &ANR. IN CIVIL APPEAL NOS. 5899-5900 OF 2014 DATED 01.07.2014, COPY SUBMITTED AND KEPT O N RECORD. HE ALSO PLACED RELIANCE ON ANOTHER JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF M/S. LARSEN & TOUBRO LTD. &ANR. VS. STATE OF KARNAT AKA &ANR. IN CIVIL APPEAL NOS. 8672 TO 8699 OF 2013 DATED 26.09.2013, COPY SU BMITTED AND KEPT ON ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 16 OF 24 RECORD. HE ALSO SUBMITTED THAT THE COPY OF MOU ENT ERED BY THE ASSESSEE WITH THE DEVELOPER AND VENDORS BY WAY OF TRIPARTITE AGRE EMENT IS AVAILABLE ON PAGES 35 TO 55 OF PAPER BOOK SUBMITTED BY ASSESSEE AND HE DRAWN OUR ATTENTION TO VARIOUS PARAS OF THIS TRIPARTITE AGREEMENT AND SUBM ITTED THAT THIS TRIPARTITE AGREEMENT IS IN THE NATURE OF WORKS CONTRACT AND TH EREFORE, PROVISIONS OF SECTION 194C OF IT ACT ARE APPLICABLE IN THE PRESEN T CASE AND HENCE, THE ORDER OF CIT(A) SHOULD BE REVERSED AND THAT OF AO SHOULD BE RESTORED. AS AGAINST THIS, THE LD. AR OF ASSESSEE SUPPORTED THE ORDER OF CIT(A) AND PLACED RELIANCE ON VARIOUS JUDGEMENTS OF HON'BLE KARNATAKA HIGH COU RT OF WHICH COPIES ARE AVAILABLE IN THE PAPER BOOK FILED BY THE ASSESSEE A ND THESE JUDGEMENTS ARE AS UNDER. A) KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HO USE BUILDING COOPERATIVE SOCIETY VS. ITO IN ITA NOS. 629 TO 632/ BANG/2004 DATED 17.03.2006 BEING TRIBUNAL ORDER AVAILABLE ON PAGES 56 TO 68 OF PAPER BOOK. B) CIT VS. KARNATAKA STATE JUDICIAL DEPARTMENT EMPL OYEES HOUSE BUILDING CO-OPERATIVE SOCIETY LTD. IN ITA NO. 1275/2006 DATE D 10.03.2010 BEING JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT, COPY AVA ILABLE ON PAGES 69 TO 71 OF PAPER BOOK C) ITO VS. KAUTILYA HOUSE BLDG. CO-OPERATIVE SOCIET Y LTD. IN ITA NOS. 1324 TO 1337/BANG/2015 DATED 07.04.2016 BEING TRIBUNAL ORDE R OF BANGALORE BENCH, COPY AVAILABLE ON PAGES 72 TO 78 OF PAPER BO OK. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE ISSUE WAS DECIDED BY LD. CIT(A) AS PER PARAS 7 TO 10 OF HIS ORDER AND THESE PARAS ARE REPRODUCED HEREINBELOW FOR THE SAKE OF READY REFERENCE. 7. I HAVE GONE THROUGH THE ORDERS OF THE ASSESSING OFFICER, THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT, RELEVAN T CASE LAWS AND OTHER MATERIAL ON RECORD. THE MAIN ISSUE IN THE PRESENT APPEALS IS WHETHER THERE WAS AN OBLIGATION ON THE PART OF THE APPELLANT SOCIETY TO DEDUCT TAX AT SOURCE IN RELATION TO THE AMOUNTS PAID BY THE APPELLANT SOCIETY TO THE DEVELOPERS. TO DETERMI NE THE TRUE CHARACTER OF THE PAYMENT, IT IS PERTINENT TO CONSID ER THE RELEVANT CLAUSES OF THE AGREEMENTS. THE SAME ARE REPRODUCED BELOW - 1. THE VENDOR AND THE DEVELOPER HEREIN HAVE AGREED TO FORM THE ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 17 OF 24 RESIDENTIAL LAYOUT IN THE SCHEDULE PROPERTIES FOR A SALE CONSIDERATION OF RS. 425/- PER SQ. FT. BEING THE CO ST OF THE SITE INCLUDING THE EXPENSES FOR DEVELOPMENT OF THE LAYOU T. 2. THE VENDOR AND DEVELOPER HAVE AGREED TO FORM THE LAYOUT WHICH SHALL CONSIST OF ROADS, COMMON AMENITIES AND PARKS IN THE FOLLOWING MANNER I.E., THE CROSS ROADS SHALL BE MIN IMUM 30' FEET WIDTH AND THE MAIN ROAD SHALL BE MINIMUM OF 40' FEE T WIDTH. THE LAYOUT SHALL THEREFORE COMPRISE OF ROADS, PARKS, CI VIC AMENITIES, ETC., ON AN AREA MEASURING MINIMUM OF 45% OF THE TO TAL AREA AND THE BALANCE 55% AREA SHALL CONSIST ONLY OF RESI DENTIAL SITES OF DIFFERENT DIMENSIONS TO BE INDICATED SEPARATELY. THE PLAN WILL BE APPROVED BY APPROPRIATE AUTHORITY/ BMRDA/ BL4APA OR ANY OTHER STATUTORY AUTHORITIES CONSTITUTED BY THE GOVT . THE FORMATION OF LAYOUT SHALL BE IN ACCORDANCE WITH THE PLAN APPROVED BY BIAAPA/ BMRDA. 3. THAT THE PURCHASER HAS PAID A SUM OF RS..IN TH E FOLLOWING MANNER 4. THE VENDOR / DEVELOPER SHALL EXECUTE AN ABSOLUTE SALE DEED AND TRANSFER THE CONVERTED LANDS TO THE PURCHASER SOCIE TY ON THE FOLLOWINGTERMS AFTER CHANGE OF LAND USE I.E. FROM A GRICULTURAL TO RESIDENTIALPURPOSE. (A) THE VENDOR, DEVELOPER AND THE PURCHASER HAVE AGREED THAT THE TOTAL COST OF THE ENTIRE PROJECT IS @ RS. 425/- PER SQ. FT. BEING THE COST OF THE SITE INCLUDING THE EXPENSES FOR DEV ELOPMENT OF THE LAYOUT, WHICH SHALL BE PAID IN THE FOLLOWING MANNER 5. THAT THE PURCHASER/ SOCIETY SHALL BEAR THE STAM P DUTY CHARGESAND OTHER EXPENSES TOWARDS TRANSFER OF CONVE RTED LANDS FROMTHE VENDOR/ DEVELOPER IN THE NAME OF THE PURCHASER/SOCIETYOR THEIR NOMINEES. 6. THAT THE VENDOR AS STATED ABOVE IS THE ABSOLUTE OWNER OF THE SCHEDULE PROPERTIES AND IN THE EVENT, OF THEIR BEIN G ANY DEFECT IN THE TITLE OF THE VENDOR OVER ANY PORTION OF THE PRO PERTY THE SAME WOULD BE SET- RIGHT BY THE VENDOR/ DEVELOPER AT THE IR OWN COST AND THE VENDOR/ DEVELOPER WOULD EXTEND ALL CO-OPERA TION TO THE PURCHASER OR THEIR NOMINEES IN COMPLETING THE TRANS ACTION. 7. IF A GOOD AND MARKETABLE TITLE IS MADE OUT AND T HE PROPERTY IS FOUND TO BE FREE FROM ENCUMBRANCES, ATTACHMENTS, CH ARGES AND OTHER CLAIMS AND DEMANDS AND NOT EFFECTED BY ANY NO TICE OR SCHEME OF ACQUISITION OR REQUISITION, THE VENDOR SH ALL EXECUTE A PROPER CONVEYANCE IN FAVOUR OF THE PURCHASER OR THE IR NOMINEES AS CONVERTED LAND, HOUSE SITE BASIS SUBJECT TO THE PAYMENT TERMS ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 18 OF 24 STATED IN PARA 4 ABOVE. THE VENDOR AND DEVELOPER SH ALL BEAR AND PAY ALL OUTGOING LIABILITIES ON THE SCHEDULE PR OPERTIES UP TO REGISTRATION OF THE SCHEDULE PROPERTY. 8. IF THE VENDOR AND DEVELOPER FAILS OR NEGLECT TO COMPLETE THE SALE AFTER THE TITLE BEING MADE OUT AS AFORESAID OR OTHERWISE TO CARRY OUT ANY ONE OR MORE OF THE OBLIGATIONS ON THE IR PART, SUBJECT TO THE PURCHASER CARRYING OUT THEIR OBLIGAT IONS, THE PURCHASER IS AT LIBERTY TO SUE, TO ENFORCE SPECIFIC PERFORMANCE OF AGREEMENT BY INSTITUTION OF LEGAL PROCEEDINGS OR AT THEIR OPTION, MAY SUE THE VENDOR FOR RECOVERY OF EARNEST MONEY WITH INTEREST, COST AND OTHER RELIEF 9. THAT IF GOOD AND MARKETABLE TITLE IS NOT MADE OU T WITHIN STIPULATED PERIOD OR THE PROPERTY IS SUBJECT TO ANY SCHEME OF THE ACQUISITION OR REQUISITION FOR ANY REASON CANNO T BE ALIENATED BY VIRTUE OF ANY CENTRAL OR STATE ACT, OR NOT ABLE TO GET PERMISSION FROM AGRICULTURAL ZONE TO RESIDENTIA L PURPOSE FROM THE COMPETENT AUTHORITY, THE PURCHASER IS AT L IBERTY TO RESCIND THIS AGREEMENT AND THE VENDOR/ DEVELOPER ON DEMAND SHALL REFUND THE ADVANCE/ SECURITY DEPOSIT RECEIVED BY THEM WITHOUT ANY INTEREST. 10. THE DEVELOPER HEREIN AS A PART OF THE DEVELOPME NT PACKAGE, SHALL BE RESPONSIBLE TO ENSURE CLEAR, VALID, SUBSIS TING, MARKETABLE, ENFORCEABLE TITLE IN REGARD TO THE SCHEDULE PROPERT Y ALONG WITH VENDOR. THE VENDOR SHALL ENSURE AND SATISFY THE PUR CHASER THAT THE SCHEDULE PROPERTY IS FREE FROM ALL ENCUMBRANCES OF WHATSOEVER NATURE, THAT THERE IS ABSOLUTE OWNERSHIP WITH POWER OF ALIENATION AND DISPOSAL OVER THE SCHEDULE PROPERTIES. 11. THE DEVELOPER SHALL BE RESPONSIBLE TO CARRY OUT THE INITIAL SURVEY, TO FIX THE BOUNDARIES IN THE SCHEDULE LANDS AND TO GET APPROPRIATE TOPOGRAPHICAL SKETCH OF THE SCHEDULE LA NDS. THE VENDOR HAVE NO-OBJECTION FOR THE JOINT SURVEY OF TH E SCHEDULE PROPERTIES. 12. THE VENDOR AND MORE PARTICULARLY THE DEVELOPER SHALL BE PRIMARILY RESPONSIBLE TO ENSURE THAT THE SCHEDULE L ANDS HAD GOT CONVERTED AS PER LAW FOR RESIDENTIAL PURPOSE FROM T HE COMPETENT AUTHORITY AND MAKE THE LAYOUT CAPABLE OF BEING SOLD AS HOUSE, SITES WITH INDIVIDUAL KATHA FROM THE MUNICIPALITY/ JURISD ICTIONAL COMPETENT AUTHORITY. 13. THE DEVELOPER SHALL BE RESPONSIBLE TO APPROACH THE CONCERNED COMPETENT AUTHORITIES HAVING JURISDICTION OVER THE SCHEDULE LANDS AND SEEK SANCTION AND APPROVAL OF THE LAYOUT PLAN O R THE DEVELOPMENTAL PLAN AT THEIR COST. ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 19 OF 24 14. THE DEVELOPER SHALL BE RESPONSIBLE TO APPROACH VARIOUS STATUTORY AUTHORITIES, TO SECURE NOC FOR PURPOSE OF SECURING THE PLAN SANCTION FROM THE COMPETENT AUTHORITY SUCH AS WATER SUPPLY AND SEWAGE BOARDS, ELECTRICAL BOARD, POLLUTION CONT ROL BOARD AND SUCH OTHER STATUTORY AUTHORITIES, GOVERNMENTAL, SEM I- GOVERNMENTAL ETC., TO SECURE THE PLAN SANCTION. 15. THE VENDOR AND DEVELOPER HEREIN SHALL DEVELOP T HE RESIDENTIAL LAYOUT, FOR THE BENEFIT OF THE PURCHASER/ SOCIETY O R ITS MEMBER/ S WHICH AMONG OTHER THINGS SHALL COMPRISE OF THE FOLLOWING INFRASTRUCTURE, BENEFITS, AMENITIES. THE DETAILS ARE AS FOLLOWS: A. FRONT ARCH WITH SECURITY ROOM. B. LAYING AND ASPHALTING OF ROADS WITH 25MM THICKNESS, ACCORDING TO THE PLANNING AUTHORITIES NORMS. C. TREE PLANTATION. D. BOX TYPE DRAINAGE WITH 2 FEET WIDTH. E. CULVERS COVERED WITH RCC SLABS, F. 3 FEET WIDTH FOOTPATH WITH INTER LOCK TILES. G. UNDERGROUND SANITARY NETWORK WITH PROVISION OF SEWA GE TREATMENT PLANT TO ENSURE PROPER OUT FLOW OF SEWERA GE. H. WATER SUPPLY NET WORK WITH PVC PIPE, WHICH INCLUDES PROVISION FOR SUFFICIENT NUMBERS OF BORE-WELLS. CONSTRUCTION OF OVER HEAD TANK (1.0 LAKHS LITRES CA PACITY), UNDERGROUND SUMP WITH 25,000 LITRES CAPACITY FOR PUMPING AND SUPPLYING OF WATER THROUGH UNDERGROUND WATER LINES. I. OVER HEAD ELECTRICITY WITH STREET LIGHTING WHICH IN CLUDES LAYING OF ELECTRICAL POLES, DRAWING OF ELECTRICAL L INES, PROVIDING OF STREET LIGHTS, ERECTION OF SUFFICIENT NUMBERS OF TRANSFORMERS, CHARGING OF ELECTRICITY BY KEB AUTHOR ITIES FOR THE ENTIRE LAYOUT. J. TO PROVIDE SUFFICIENT NUMBER OF BOARDS INDICATIN G THE MAIN ROAD, CROSS ROAD, ETC., BESIDES ON BOARD SHOWING EN TIRE LAYOUT PLAN. K. MARKING OF INDIVIDUAL SITE, NUMBERING THE INDIVIDUA L SITES AS PER THE APPROVED PLAN. 1. THE ENTIRE LAYOUT WILL BE CONSTRUCTED WITH 6' F EET COMPOUND WALL WITH SOLID BRICKS. M. PARKS WITH LANDSCAPING, PATHWAYS AND GARDEN. N. RAIN WATER HARVESTING FOR THE ENTIRE LAYOUT TO CONS ERVE WATER SOURCES. 16. THE PURCHASER SOCIETY AND SOCIETY'S CONSULTING ENGINEER IS ENTITLES TO PERIODICALLY VISIT THE LAYOUT TO SATISF Y ITSELF, REGARDING THE QUALITY, PROGRESS AND OTHER RELATED M ATTERS. THE ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 20 OF 24 OFFICERS, EMPLOYEES OF THE DEVELOPER SHALL EXTEND FULL CO- OPERATION TO THE OFFICE BEARERS OR OFFICIALS OF THE PURCHASER SOCIETY DURING THE COURSE OF THEIR INSPECTION OF THE SCHEDU LE PROPERTY. 17.THE EXPENSES OF STAMP DUTY FOR REGISTRATION OF I NDIVIDUAL SITES SHALL BE BORNE EXCLUSIVELY BY THE PURCHASER SOCIETY 'S ALLOTTEE MEMBERS OR THEIR NOMINEE/ S. THE VENDOR HAS NO OBJE CTION FOR THE PURCHASER/ SOCIETY REGISTERING THE INDIVIDUAL SITES , IN FAVOUR OF ITS MEMBERS. 8. ON PERUSAL OF THE RELEVANT CLAUSES OF THE SAID A GREEMENT, IT IS CLEAR THAT THE PAYMENT WAS CALCULATED ON SQ.FT. AREA OF T HE PROPERTY AND WAS PAID FOR THE PURCHASE OF COMPLETED PROPERTY AND NOT DEVELOPMENT WORK CARRIED OUT. THE AGREEMENT IS ONLY FOR PURCHAS E OF DEVELOPED SITES AND DOES NOT INVOLVE ANY WORKS CONTRACT. 9. THE ISSUE IS CLEARLY COVERED BY THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO-OPERATIVE SOCIETY LTD.( SUPRA). THE RELEVANT EXTRACT OF THE SAID JUDGEMENT IS REPRODUCE D AS UNDER - .. THE SHORT QUESTION THAT FELL FOR THE CONSIDERA TION FOR THE ASSESSING OFFICER, THE COMMISSIONER OF INCOME-T AX AND THE TRIBUNAL WAS WHETHER IF THE ASSESSEE HAS AGREED TO PURCHASE THE SITES FROM A VENDOR IF ANY SALE CONSIDERATION IS PA ID ON INSTALMENT BASIS, THE ASSESSEE IS REQUIRED TO DEDUCT THE TAX A T SOURCE OR NOT. WHEN THE ASSESSEE IS ONLY A PURCHASER, IF ANY ADVAN CE 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 DEPENDING UPON THE TAX PAYABLE BY HIM.' IN THE SAID CASE, EARLIER HON'BLE ITAT, BANGALORE H AD HELD THAT - '....THE AGREEMENT BETWEEN SH. LAKSHMAN, AND KARNAT AKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO- OPERATIVE SOCIETY BEGINS TO OPERATE ONLY AFTER THE LAYOUT IS FORMED AND SO CAN NEVER BE CONSTRUED AS AN AGREEMENT IN TH E NATURE OF WORKS CONTRACT. A CONTRACTOR IS ONE WHO UNDERTAKES TO DO A PARTICULAR WORK FOR A PRICE. NO SUCH CONTRACT IS EN VISAGED IN THIS AGREEMENT. THIS AGREEMENT ENVISAGES PURCHASE OF SP ECIFIED INTERMEDIATE SITES AT A PRICE AFTER SRI LAKSHMAN CO MPLETES THE JOB OF FORMATION OF A LAYOUT EITHER IN FULL OR IN PART. WE ACCORDINGLY HOLD THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX IN THIS REGARD.' 10. SIMILAR DECISION HAS BEEN RENDERED BY HON'BLE I TAT, BANGALORE IN THE CASE OF M/S KAUTILYA HOUSE BUILDING CO-OP. SOCIETY LTD. (ITA NO. 1324 TO 1337/BANG/2015; ORDER DATED 07.04.2016) . THE FACTS IN THE CASE OF THE APPELLANT ARE SIMILAR TO THE FACTS IN THE CASES REFERRED TO ABOVE. RESPECTFULLY FOLLOWING THE DECISIONS OF T HE HON'BLE HIGH COURT OF KARNATAKA AND ITAT, BANGALORE, IT IS HELD THAT THE APPELLANT ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 21 OF 24 SOCIETY WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE FR OM THE PAYMENTS MADE TO THE DEVELOPERS. ACCORDINGLY, THE DEMAND RAI SED U/S 201(1) AND 201(1A) IS DELETED. 7. FROM THE ABOVE PARAS REPRODUCED FROM THE ORDER O F CIT(A), IT IS SEEN THAT LD. CIT(A) HAS FOLLOWED THE JUDGEMENT OF HON'BLE KARNAT AKA HIGH COURT RENDERED IN THE CASE OF CIT VS. KARNATAKA STATE JUDICIAL DEP ARTMENT EMPLOYEES HOUSE BUILDING CO-OPERATIVE SOCIETY LTD. (SUPRA) AND ALSO THE TRIBUNAL ORDER RENDERED IN THAT CASE AND ALSO THE TRIBUNAL ORDER RENDERED I N THE CASE OF ITO VS. KAUTILYA HOUSE BLDG. CO-OPERATIVE SOCIETY LTD. (SUP RA) AND A CATEGORICAL FINDING HAS BEEN GIVEN BY CIT(A) IN PARA 8 OF HIS O RDER THAT ON PERUSAL OF THE RELEVANT CLAUSES OF THE AGREEMENT, IT IS CLEAR THAT THE PAYMENT WAS CALCULATED ON SQ.FT. AREA OF THE PROPERTY AND WAS PAID FOR THE PURCHASE OF COMPLETED PROPERTY AND NO DEVELOPMENT WORK WAS CARRIED OUT. WHEN WE EXAMINE THE MOU AVAILABLE ON PAGES 35 TO 55 OF PAPER BOOK, WE F IND THAT THE RECITAL ON PAGE NO. 43 OF THIS MOU IS VERY MUCH RELEVANT AND HENCE, THE SAME IS REPRODUCED HEREINBELOW. WHEREAS UNDER SUCH CIRCUMSTANCE THE VENDOR HEREIN HAS AGREED TO DEVELOP THE SCHEDULE PROPERTIES THROUGH T HE DEVELOPER HEREIN TO FORM A RESIDENTIAL LAYOUT AND TO SELL THE SITES FORMED AND CARVED OUT IT SCHEDULE PROPERTIES AND CONVEY THE SA ME TO THE PURCHASER OR THEIR MEMBERS ON THE CONSIDERATION OF RS.425/- (RUPEES FOUR HUNDRED AND TWENTY FIVE ONLY) PER SQ.F T., BEING THE COST OF THE SITE INCLUDING THE EXPENSES FOR DEVELOP MENT OF THE LAYOUT. 8. FROM THE ABOVE RECITAL, IT COMES OUT THAT THE AG REEMENT FOR DEVELOPMENT OF THE PROPERTY IS BETWEEN THE VENDOR AND DEVELOPER AND AF TER SUCH DEVELOPMENT; THE PROPERTY HAS TO BE TRANSFERRED TO THE PURCHASER OR OTHER MEMBERS FOR CONSIDERATION OF RS. 425/- PER SQ.FT. BEING THE COS T OF THE SITE INCLUDING THE EXPENSES FOR DEVELOPMENT OF THE LAYOUT. THERE IS N O SUCH BIFURCATION AS TO HOW MUCH IS THE COST OF UNDEVELOPED LAND AND HOW MUCH I S THE COST FOR DEVELOPMENT. THEREAFTER AS PER PARA 7 OF THIS MOU, IT HAS BEEN SPECIFIED THAT IF A GOOD AND MARKETABLE TITLE IS MADE OUT AND THE PROPERTY IS FOUND TO BE FREE FROM ENCUMBRANCES, ATTACHMENTS, CHARGES AND OTHER C LAIMS AND DEMANDS AND NOT EFFECTED BY ANY NOTICE OR SCHEME OF ACQUISITION OR REQUISITION, THE VENDOR ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 22 OF 24 SHALL EXECUTE A PROPER CONVEYANCE IN FAVOUR OF THE PURCHASER OR THEIR NOMINEES AS CONVERTED LAND, HOUSE SITE BASIS SUBJECT TO THE PAYMENT TERMS STATED IN PARA 4 AND THE VENDOR AND DEVELOPER SHALL BEAR AND PAY A LL OUTGOING LIABILITIES ON THE SCHEDULE PROPERTIES UP TO REGISTRATION OF THE SCHED ULE PROPERTY AND FROM PARA 8 OF MOU, IT IS SPECIFIED THAT IF VENDOR AND DEVELOPE R FAIL OR NEGLECT TO COMPLETE THE SALE AFTER THE TITLE BEING MADE OUT AS AFORESAI D OR OTHERWISE TO CARRY OUT ANY ONE OR MORE OF THE OBLIGATIONS ON THEIR PART, SUBJE CT TO THE PURCHASER CARRYING OUT THEIR OBLIGATIONS, THE PURCHASER IS AT LIBERTY TO SUE, TO ENFORCE SPECIFIC PERFORMANCE OF AGREEMENT BY INSTITUTION OF LEGAL PR OCEEDINGS OR AT THEIR OPTION, MAY SUE THE VENDOR FOR RECOVERY OF EARNEST MONEY WI TH INTEREST, COST AND OTHER RELIEF. IT WAS ARGUED BY LD. AR OF ASSESSEE THAT F ROM THESE CLAUSES OF MOU, IT IS SEEN THAT THIS MOU IS CONDITIONAL AND THEREFORE, IT CANNOT BE SAID TO BE A WORKS CONTRACT BETWEEN THE ASSESSEE BEING THE PURCH ASER AND THE VENDOR BEING THE DEVELOPER BECAUSE IN PARA 6 OF THE MOU, I T IS SPECIFIED THAT IN THE EVENT OF THEIR BEING ANY DEFECT IN THE TITLE OF THE VENDOR OVER ANY PORTION OF THE PROPERTY, THE SAME WOULD BE SETRIGHT BY THE VENDOR / DEVELOPER AT THEIR OWN COST AND THE VENDOR / DEVELOPER WOULD EXTEND ALL CO -OPERATION TO THE PURCHASER OR THEIR NOMINEES IN COMPLETING THE TRANSACTION. U NDER THESE FACTS, WE FIND NO INFIRMITY IN THE FINDING OF CIT(A) AS PER WHICH IT IS STATED BY CIT(A) THAT THE CONSIDERATION OF RS. 425/- PER SQ.FT. WAS BEING PAI D FOR THE PURCHASES OF COMPLETED PROPERTY AND NOT FOR DEVELOPMENT WORK BEI NG CARRIED OUT. 9. IN THE LIGHT OF THESE UNCONTROVERTED FACTS, NOW WE EXAMINE THE APPLICABILITY OF JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO-OPERATIVE SOCIETY LTD. (SUPRA). IN THIS CASE, IT WAS HELD BY HON'BLE KARNATAKA HIGH COURT THAT THE ASSESSEE HAS AGREED TO PURCHASE SITES FROM VENDOR AND IF ANY SALE CONSIDERATION IS PAID ON INSTALMENT BASIS, THE ASSE SSEE IS NOT REQUIRED TO DEDUCT THE TAX AT SOURCE BECAUSE IN SUCH SITUATION, THE ASSESSEE IS ONLY A PURCHASER AND HENCE, THERE IS NO LIABILITY TO DEDUC T TDS. IN THAT CASE, THE AGREEMENT WAS NOT A TRIPARTITE AGREEMENT BUT THE AG REEMENT WAS BETWEEN THE ASSESSEE BUYER AND MR. LAKSHMAN BEING VENDOR/DEVELO PER AND IT IS NOTED BY ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 23 OF 24 TRIBUNAL IN ITS ORDER IN THAT CASE THAT MR. LAKSHMA N UNDERTOOK TO ACQUIRE AND DELIVER APPROXIMATELY 60% OF THE SCHEDULED PROPERTY AS RESIDENTIAL INTERMEDIATE SITES TO THE ASSESSEE AFTER FORMING THEM INTO SITES OF DIMENSIONS SPECIFIED BY THE ASSESSEE TO ENABLE THE ASSESSEE TO ALLOT THEM T O ITS MEMBERS. IT WAS ALSO NOTED THAT THE COST OF DEVELOPMENT INCLUDING PROVIS ION FOR PROVIDING AMENITIES LIKE ROAD, DRAINAGE SYSTEM, WATER, ELECTRICITY WERE TO BE MET BY THE SAID SHRI LAXMAN. WE FIND THAT THERE IS NO DIFFERENCE IN FACT S IN THE PRESENT CASE AND IN THAT CASE EXCEPT THIS THAT IN THAT CASE, THE VENDOR S BEING OWNERS OF LAND WERE NOT KNOWN AND THEY WERE NOT A PARTY OF AGREEMENT AN D THAT AGREEMENT WAS BETWEEN THE ASSESSEE BEING PURCHASER AND MR. LAKSHM AN, WHO UNDERTOOK TO ACQUIRE THE LAND AND DEVELOP IT IN RESIDENTIAL SITE S AS REQUIRED BY THE ASSESSEE. IN THE PRESENT CASE, THE VENDORS BEING THE LAND OWN ERS ARE ALREADY THERE AND THEREFORE, THERE IS TRIPARTITE AGREEMENT IN THE PRE SENT CASE BETWEEN THE ASSESSEE, THE VENDORS BEING THE LAND OWNERS AND DEV ELOPER M/S. RAZARI DEVELOPERS PVT. LTD. IN THE PRESENT CASE, DEVELOPM ENT WORK WHICH WAS BEING DONE BY MR. LAKSHMAN IN THAT CASE IS TO BE DONE BY THE VENDOR AND DEVELOPER JOINTLY. MERELY BECAUSE THERE IS A TRIPARTITE AGREE MENT IN THE PRESENT CASE, IT CANNOT BE SAID THAT THE FACTS ARE DIFFERENT IN THE PRESENT CASE AND HENCE, IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE OR DER OF CIT (A) AS PER WHICH HE HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CIT VS. KARNATAKA STATE JUDICIAL DEPARTMENT EMPLOYEES HOUSE BUILDING CO-OPE RATIVE SOCIETY LTD. (SUPRA). WE, THEREFORE, DECLINE TO INTERFERE IN TH E ORDER OF CIT (A). 10. REGARDING VARIOUS JUDGMENTS OF HONBLE APEX COU RT CITED BY THE LEARNED DR OF THE REVENUE, WE HOLD THAT IN OUR CONSIDERED OPINION , THESE ARE NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE PRICE DETERMINED AS PE R MOU IS THE PRICE OF DEVELOPED LAND AND NOT OF UNDEVELOPED LAND SEPARATE LY AND FOR DEVELOPMENT WORK SEPARATELY. ITA NOS. 264 TO 271/BANG/2017 & C.O. NOS. 66 TO 69/BANG/2017 PAGE 24 OF 24 11. IN THE RESULT, ALL THE APPEALS FILED BY THE REV ENUE ARE DISMISSED AND ALL THE COS FILED BY THE ASSESSEE ARE ALSO DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 25 TH MAY, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.