M/s. Vasavi Housing Co-Operative Society, Bengaluru V. Income Tax Officer (TDS), Ward-3(4), Bengaluru

ITA 287/BANG/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4562 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 20-04-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SANDEEP CHALAPATHY
• Keywords: TDS
• Section: 194C; 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA Nos. 284 to 289/Bang/2022 Assessment Years : 2011-12 to 2014-15 M/s. Vasavi Housing Co- operative Society, 108, Sri Chakra, 2 nd Floor, East Park road opp to Vasavi Mahal, Malleshwaram, Bengaluru – 560 003. PAN: AABAV4661L Vs. The Income Tax Officer (TDS), Ward 3 (4), Bengaluru. APPELLANT RESPONDENT Assessee by : Shri Sandeep Chalapathy, CA Revenue by : Shri Srinivas Rao Bandaru, JCIT DR Date of Hearing : 12-07-2022 Date of Pronouncement : 22-07-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeals arises out of separate orders passed by Ld.CIT(A)-11, Bangalore all dated 25/02/2022 for A.Ys. 2011-12 to 2014-15. 2. The Ld.CIT(A) held assessee to be in default u/s. 201(1) of the Act and levying interest u/s. 201(1A) of the act for the years under consideration, the details of which are as under: Page 2 of 10 ITA Nos. 284 to 289/Bang/2022 A.Y. 201(1) 201(1A) 2011-12  Nil 2012-13  Nil 2013-14   2014-15   3. Brief facts of the case are as under: 3.1 Assessee is a cooperative housing society with main object to provide residential sites to its members. Assessee entered into an agreement with M/s. Shree Sai Associates for procurement and development of sites and transfer the same to the assessee for purposes of allotting the sites to its members. It is a submission of assessee that the agreement was entered into between M/s. Shree Sai Associates vide MoU dated 21/09/2010 for purchases of developed land and therefore TDS was not liable to be deducted. Revenue however treated assessee to be ‘assessee in default’ for not deducting at source u/s. 194C of the Act on the payments made to M/s. Shree Sai Associates towards the works contract. The Ld.AO held that the payment made by assessee was towards works contract on which TDS was liable to be made and the MoU between assessee and M/s. Shree Sai Associates is in the nature of contract. The Ld.AO made addition in the hands of the assessee as under: A.Y. 201(1) (Rs.) 201(1A) (Rs.) 2011-12 2,52,300 Nil 2012-13 76,85,535 Nil 2013-14 11,14,620 8,43,302 2014-15 5,03,137 3,36,836 3.2 Aggrieved by the disallowance or addition made, assessee preferred appeal before the Ld.CIT(A). The Ld.CIT(A) upheld the order of Ld.AO and held that assessee was liable to deduct TDS on the payments made in relation to the development work. Page 3 of 10 ITA Nos. 284 to 289/Bang/2022 3.3 Aggrieved by the orders of Ld.CIT(A), assessee has been preferred appeals before this Tribunal independently challenging the disallowance u/s. 201(1) of the Act and levy of interest u/s. 201(1A) of the Act for A.Ys. 2013-14 and 2014-15. 4. Before us, the Ld.AR primarily submitted that, the work carried out by M/s. Shree Sai Associates are not in the nature of works contract and therefore assessee was not liable to deduct TDS. He submitted that the assessee proposed to purchase the developed land in a suitable location by transferring the documents from such land owners and the developed land would be transferred to its members, against which an agreed price was payable by the assessee. For this activity, assessee authorised M/s. Shree Sai Associates to develop the land and transfer the same to the society. He submitted that various clauses in the MoU categorically stipulates that M/s. Shree Sai Associates would procure the land and convey the developed society to the assessee. Referring to clause (4) of the MoU, the Ld.AR submitted that M/s. Shree Sai Associates has entered into purchase of lands from the respective owners in order to develop them. He thus submitted that assessee was in the bonafide belief that TDS was not liable to be deducted. 5. The Ld.AR submitted that assessee on completion of the layout work was to pay the remuneration at Rs. 387/- per sq.ft. of the developed premises which includes the cost of the land, various charges paid by M/s. Shree Sai Associates to the Government for obtaining necessary permissions, payment of conversion charges etc. He thus submitted that assessee cannot be held to be an assessee in default. Page 4 of 10 ITA Nos. 284 to 289/Bang/2022 6. On the contrary, the Ld.DR submitted that this is a clear case of works contract between assessee and M/s. Shree Sai Developers wherein all the development activities are carried out according to the assessee. The various stages at which the payment are being made by assessee to M/s. Shree Sai Developers clearly indicates that it is a works contract that was executed and therefore liable for TDS to be deducted. 7. We have perused the submissions advanced by both sides in the light of records placed before us. 8. On perusal of the MoU between assessee and M/s. Shree Sai Associates dated 21/09/2010, we note that M/s. Shree Sai Associates is a developer cum contractor who has procured the land for the purposes of construction of residential houses at the request of the assessee on behalf of all its members. Upon purchases of land, confirmation of the site by the developer / contractor. It is also noted in clause (7) of the MoU that all necessary permission for registration of the project land was in the name of assessee and that the developer / contractor would be developing the layout as agreed with assessee. Clause (16) of the agreement mentions that the developer / contractor would be liable to pay sales tax on the works contract, VAT / service tax or any other applicable taxes leviable on or during the course of the development of the project land. The clause (17) further refers to the name that shall be adopted for the entire project that would be decided by the assessee alone. The obligation clause no. (22) of the MoU reveals that the work carried out by the developer / contractor was as per the requirements of the assessee. Assessee could have approached various government officials for necessary permission and therefore approach the developer/contractor to Page 5 of 10 ITA Nos. 284 to 289/Bang/2022 carry out the development of residential layout in all respects over the project land. For sake of clarity, we reproduce clause (22) herewith as under: Page 6 of 10 ITA Nos. 284 to 289/Bang/2022 Page 7 of 10 ITA Nos. 284 to 289/Bang/2022 Page 8 of 10 ITA Nos. 284 to 289/Bang/2022 Page 9 of 10 ITA Nos. 284 to 289/Bang/2022 9. On perusal of the above clauses, we do not hesitate to agree with the view taken by the revenue authorities that, the agreement between assessee and M/s.Shree Sai Associates is in the nature of works contract. 10. Before us, assessee alternatively argued that, the amount made towards the cost of the land and expenditure towards various permission, should be kept outside the purview of TDS provision as these are expenses, which does not fall within the ambit of works contract. In any event, purchase of immovable property, by an assessee from a developer, was otherwise for TDS at 1%. We therefore agree Ld.CIT(A) that the assessee was liable to deduct TDS. Assessee therefore cannot be exonerated from the charge of being ‘assessee in default’. 11. The alternative argument advanced by the assessee deserves to be accepted as the cost of the land cannot be considered to be liable for TDS along with the expenses incurred towards various permissions from the State Government. 12. Therefore the levy of interest u/s. 201(1A) of the Act, computed by the Ld.AO for A.Ys. 2013-14 and 2014-15 should exclude the payment made towards cost of the land and various approvals. We therefore do not find any infirmity in the view taken by Ld.CIT(A) in the appeals filed before us. In the result, all the appeals filed by the assessee stands dismissed. Order pronounced in open court on 22 nd July, 2022. Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 22 nd July, 2022. /MS / Page 10 of 10 ITA Nos. 284 to 289/Bang/2022 Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore