Lagad Brothers Developers, Pune V. Deputy Commssioner of Income-tax,

ITA 355/PUN/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6958 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 01-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ITA NO PUN; SUHAS KULKARNI ITA NO PUN
• Keywords: Business income
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 35 5 /P U N/20 1 5 / ASSESSMENT YEAR: 20 10 - 11 LAGAD BROTHERS DEVELOPERS, S.NO.12, LAGAD MALA, WADAGAON KHURD, SINHGAD ROAD, PUNE 411 051 . / APPELLANT PAN: AACFL9050F VS. THE DY. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 2(3), PUNE. . / RESPONDENT . / ITA NO. 439 /P U N/20 15 / ASSESSMENT YEAR: 2010 - 11 THE DY. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE - 2(3), PUNE. . / APPELLANT VS. LAGAD BROTHERS DEVELOPERS, S.NO.12, LAGAD MALA, WADAGAON KHURD, SINHGAD ROAD, PUNE 411 051 PAN: AACFL9050F . / RESPONDENT ASSESSEE BY : SHRI SUHAS P BORA REVENUE BY : SHRI SUHAS KULKARNI ITA NO. 355 /PUN/201 5 & ITA NO.439/PUN/2015 LAGAD BROTHERS DEVELOPERS 2 / DATE OF HEARING : 30 . 0 3 .201 7 / DATE OF PRONOUNCEMENT: 31 . 0 3 .201 7 / ORDER PER SUSHMA CHOWLA, J M : THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE ARE AGAINST THE ORDER OF CIT(A) - 12, PUNE DATED 20.01.2015 RELATING TO ASSESSMENT YEAR 2010 - 11 AGAINST THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3 . THE ASSESSEE IN ITA NO.355/PUN/2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL AS UNDER: - 1. THE LEARNED CIT(A) ERRED IN HOLDING THAT A JOINT VENTURE BETWEEN TWO PARTNERSHIP FIRM CANNOT BE TERMED TO BE EITHER AOP OR BOI, WITHOUT PARTNERSHIP FIRM CANNOT BE TERMED TO BE EITHER AOP OR BOI, WITHOUT APPRECIATING THE TRUE ESSENCE OF JOINT VENTURE AGREEMENT. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE JOINT VENTURE IS NOT AOP SINCE THE APPELLANT IS NOT SHARING THE LOSSES, THEREFORE IT IS NOT LEGALLY VALID AOP. 3. THE LEARNED CIT(A) ERRED I N CONFIRMING THE ACTION OF THE AO CONSIDERING THE WITHDRAWALS FROM JOINT VENTURE AS A TAXABLE INCOME IN THE HANDS OF THE APPELLANT AS BUSINESS INCOME. 4. THE LEARNED CIT(A) FAILS TO APPRECIATE THAT THE TRUE ESSENCE OF THE AGREEMENT, WHICH REFERS TO AN AGR EED SHARING OF NET PROFIT COMPUTED ON THE BASIS OF CERTAIN PERCENTAGE OF GROSS REVENUE AFTER MAKING CERTAIN ADJUSTMENT IS VERY MUCH PERMISSIBLE UNDER THE P ROVISIONS OF CERTAIN ADJUSTMENT IS VERY MUCH PERMISSIBLE UNDER THE P ROVISIONS OF LAW. ITA NO. 355 /PUN/201 5 & ITA NO.439/PUN/2015 LAGAD BROTHERS DEVELOPERS 3 4 . THE REVENUE IN ITA NO.439/PUN/2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL AS UNDER: - 1. THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN RESTRICTING THE QUANTUM OF ADDITION TO 12.5% OF THE TOTAL AMOUNT RECEIVED BY THE ASSESSEE DURING THE YEAR ON THE BASIS OF PERCENTAGE COMPLETION METHOD. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN NOT TAKING INTO CONSIDERATION THE FACT, THAT THE ASSESSEE IS ALREADY RECEIVING THE SALE PROCEEDS ON YEAR TO YEAR BASIS. 4. FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LD. CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPELLATE PROCEEDIN GS BEFORE THE HON'BLE TRIBUNAL. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEALS IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES APPEAL IN ITA NO.2038/PN/2013 AND REVENUES CROSS APPEAL IN ITA NO.310/PN/2014, RELATING TO ASSESSMENT YEAR 2007 - 08, VIDE ORDER DATED 09.03.2016 , WITH LEAD ORDER IN THE CASE OF DARODE JOG LAGAD VENTURES . 6. BRIEFLY, IN THE FACTS OF THE CASE, THERE EXISTED A REGISTERED JOINT VENTURE AGREEMENT BETWEEN M/S. LAGAD BROTHERS DEVELOPERS AND DARODE - JOG & ASSOCIATES . SEARCH ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT IN THE CASE OF DARODE JOG BUILDERS PVT. LTD. AND THE REGISTERED AGREEMENT AND ITA NO. 355 /PUN/201 5 & ITA NO.439/PUN/2015 LAGAD BROTHERS DEVELOPERS 4 VARIOUS OTHER PAPERS WERE FOUND. CONSEQUENT THERETO, NOTICE UNDER SECTION 153C OF THE ACT WA S ISSUED AND THE ASSESSEE IN RESPONSE FILED THE RETURN OF INCOME. THE ASSESSING OFFICER WAS OF THE VIEW THAT IT WAS A JOINT DEVELOPMENT AGREEMENT BETWEEN THE PARTIES AND NOT JOINT VENTURE DEVELOPMENT AGREEMENT. IN VIEW THEREOF, THE ASSESSING OFFICER HELD THAT THE PROFITS COULD NOT BE ASSESSED IN THE HANDS OF AOP AND THE SAME HAD TO BE ASSESSED IN THE HANDS OF TWO INDIVIDUAL PARTIES. THE ASSESSEE BEFORE US IS ONE OF THE INDIVIDUAL S PARTY . ACCORDINGLY, WITHDRAWALS MADE BY THE ASSESSEE FROM THE JOINT VENTU RE DEVELOPMENT AGREEMENT WERE ASSESSED IN THE HANDS OF ASSESSEE. THE ASSESSEE WAS ALSO HELD NOT ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 7. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER. HOWEVER, HE RE - WORKED THE INCOME TO B E ASSESSED IN THE HANDS OF ASSESSEE BY FOLLOWING PROJECT COMPLETION METHOD , BUT DENIED THE DEDUCTION CLAIMED UNDER SECTION 80IB(10) OF THE ACT. 8. WE FIND THAT THE TRIBUNAL IN BUNCH OF APPEALS IN THE CASE OF DARODE JOG LAGAD VENTURES VS. ACIT IN ITA NOS.2038 TO 2041/PN/2013 RELATING TO ASSESSMENT YEARS 2007 - 08 TO 2010 - 11, ORDER DATED 09.03.2016 HELD THAT THE JOINT VENTURE DEVELOPMENT AGREEMENT BETWEEN THE PARTIES WAS NOT JOINT DEVELOPMENT AGREEMENT AND CONSEQU ENTLY, THE STATUS OF THE SAID CONCERN WAS DIRECTED TO BE ADOPTED AS AOP. IN THE CONNECTED APPEAL OF ASSESSEE BEFORE US I.E. IN ITA NOS.310 TO 312/PN/2014 RELATING TO ASSESSMENT YEARS 2007 - 08 TO 2009 - 10, VIDE ORDER DATED 09.03.2016 APPLYING THE SAID PROPOS ITION OF ACCEPTING THE STATUS OF AOP IN THE CASE OF DARODE JOG LAGAD VENTURES, THE ITA NO. 355 /PUN/201 5 & ITA NO.439/PUN/2015 LAGAD BROTHERS DEVELOPERS 5 TRIBUNAL FURTHER HELD THAT ONCE THE AGREEMENT BETWEEN M/S. LAGAD BROTHERS DEVELOPERS AND DARORE JOG & ASSOCIATES CONSTITUTE AOP AND NOT DEVELOPMENT AGREEMENT, THEN ANY AMOUN T DRAWN FROM THE AOP COULD NOT BE TAXED IN THE HANDS OF ASSESSEE MEMBER. THE TRIBUNAL FURTHER HELD THAT IT IS ONLY THE JOINT VENTURE THAT HAS TO PAY THE TAX AND THE ASSESSEE IS NOT LIABLE TO PAY ANY TAXES ON THE AMOUNT WITHDRAWN FROM THE JOINT VENTURE. T HE ASSESSEE IS ALSO NOT ENTITLED TO ANY DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AND IT IS JOINT VENTURE THAT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. 9. THE ISSUE ARISING BEFORE US IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO EARLIER YEARS I.E. ASSESSMENT YEARS 2007 - 08 TO 2009 - 10. THE TRIBUNAL WHILE DECIDING THE APPEAL IN THE CASE OF DARODE JOG LAGAD VENTURES VS. ACIT (SUPRA) FOR ASSESSMENT YEAR 2010 - 11 ALSO HAD HELD THAT THE STATUS OF THE S AID CONCERN WAS AOP AND CONSEQUENTLY, ANY AMOUNT DRAWN FROM THE AOP, BY THE ASSESSEE BEFORE US, CANNOT BE TAXED IN THE HANDS OF ASSESSEE MEMBER. THE TAXES ARE THE LIABILITY OF JOINT VENTURE AND THE ASSESSEE IS NOT LIABLE TO PAY ANY TAXES ON THE AMOUNT WITHDRAWN FROM THE JOINT VENTURE . C ONSEQUENTLY, THE ASSESSEE IS ALSO NOT ENTITLED TO ANY DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. IN VIEW THEREOF, THE GROUNDS OF APPEAL NO.1 TO 4 RAISED BY THE ASSESSEE ARE ALLOWED IN FAVOUR OF THE ASSESSEE. HOWEVER, GROUND OF APPEAL NO.5 AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IS DECIDED AGAINST THE ASSESSEE AND HENCE, THE SAME IS DISMISSED. THE ISSUE IN GROUNDS OF APPEAL NO.6 AND 7 I.E. THE ASSESSABILITY OF PROFITS IN THE HANDS OF ASSESSEE BECOME ACADEMIC IN NATURE AND THE SAME ARE DISMISSED. ITA NO. 355 /PUN/201 5 & ITA NO.439/PUN/2015 LAGAD BROTHERS DEVELOPERS 6 10. SIMILARLY, GROUNDS OF APPEAL RAISED BY THE REVENUE IN APPLYING THE PERCENTAGE COMPLETION METHOD TO ASSESS THE INCOME IN THE HANDS OF ASSESSEE BECOME ACADEMIC IN NATURE AND THE SAME ARE ALSO DISMIS SED. 11. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF REVENUE IS DISMISSED. ORDER P RONOUNCED ON THIS 31 ST DAY OF MARCH , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 31 ST MARCH , 201 7 . / S S G G R R / / G G C C V V S S R R / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 1 2 , PUNE ; 4. / THE CIT (CENTRAL) , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . 6. / GUARD FILE . / BY ORDER, // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE