M/s. heritage Projects, Amritsar. V. The Asstt. Commissioner of Income-tax, Amritsar.

ITA 436/ASR/2012

• Counselvise Citation: 43620914 RSA 2012
• Duration Of Justice: 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 23-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PADAM BAHL
• Keywords: Capital asset; Business income
• Section: 143(3); 142(1); 145; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 PAN: AABFT2704P M/S HERITAGE PROJECTS, VS. THE ASSIST ANT COMMISSIONER OF M- 1F, GREEN AVENUE, INCOME TAX, CIRCLE V, AMRI TSAR AMRITSAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. PADAM BAHL, CA RESPONDENT BY: SH. MAHAVIR SINGH, SR.DR DATE OF HEARING: 27.08.2013 DATE OF PRONOUNCEMENT: 09.09.2013 ORDER PER BENCH 1) THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 25.10.2012 PASSED BY LEARNED CIT(A), AM RITSAR, FOR THE ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS: I. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), AM RITSAR HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 10 ,56,80,528/- MADE BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE V, AMRITSAR UNDER THE HEAD BUSINESS OF PROFESSION BY TREATIN G THE ADVANCE RECEIVED FROM OMAXE LTD. AS ADVANCE IN THE NATURE OF TRADE OF PROFESSION AS (SURPLUS OF STOCK IN TRADE) 2 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 II. THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AMRITSAR HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE ASSES SING OFFICER IN CONCLUDING THAT THE ASSESSEE HAS EARNED THIS SURPLU S/RECEIPT ON PART PERFORMANCE OF THEIR CONTRACTUAL OBLIGATION AMOUNTI NG TO ADVENTURE IN THE NATURE OF TRADE IN CONSIDERATION OF HANDING OVER THE POSSESSING OF LAND TO DEVELOPER UNDER JOINT DEVELOPMENT AGREEM ENT. III. THAT BOTH THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS), AMRITSAR AND THE ASSESSING OFFICER HAVE FAILED TO A PPRECIATE THAT THE ADVANCE RECEIVED FROM OMAXE AT RS. 11,45,10,338/- WAS SHARE OF THE ASSESSEE OF BOOKING ADVANCES FROM THE PROSPECTIVE B UYERS AND WAS NOT IN THE NATURE OF BUSINESS INCOME AS NO SALE TRA NSACTION HAD TAKEN PLACE AND NO SALE DEED HAD BEEN EXECUTED. IV. THAT BOTH LEARNED COMMISSIONER OF INCOME TAX (APPEA LS), AMRITSAR AND THE LEARNED ASSESSING OFFICER HAVE FAILED TO AP PRECIATE THAT THE ASSESSEE HAD BEEN HOLDING THIS LAND AS STOCK IN TR ADE AND NOT AS INVESTMENT AND PROFIT/GAIN ON THE SAME COULD ARIS E ONLY ON ITS SALE AND EXECUTION OF SALE DEED. V. THAT BOTH LEARNED COMMISSIONER OF INCOME TAX(APPEAL S), AMRITSAR AND THE LEARNED ASSESSING OFFICER HAD FAILED TO APP RECIATE THAT BOOKING AMOUNTS RECEIVED WERE BEING REFUNDED REGULA RLY ON BOOKINGS BEING CANCELLED. VI. THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS), AMRITSAR HAS FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAD WRONGLY INFERRED THAT THE ASSESSEE HAD EXECUTED A GPA IN FAVOUR OF D EVELOPER IN PARA 4 AT PAGE 5 OF ASSESSMENT ORDER. VII. THAT BOTH LEARNED COMMISSIONER OF INCOME TAX(APPEAL S), AMRITSAR, AND LEARNED ASSESSING OFFICER HAVE GROSSLY ERRED IN RELYING ON DECISION OF SUPREME COURT IN CASE OF P.M. MOHAMMED MEERKHAN VS. CIT 73 ITR 735 WHERE THE FACTS OF THE CASE WERE TOT ALLY DIFFERENT. VIII. THAT BOTH THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS), AMRITSAR AND LEARNED ASSESSING OFFICER HAVE FAILED TO APPRECIATE THAT THE ASSESSEE WAS ENGAGED IN REAL ESTATE BUSINESS AND WAS HOLDING 3 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 THE LAND AS STOCK IN TRADE AND WAS NOT IN THE BUS INESS OF EXECUTION OF CONTRACTS AS OPINED BY HIM ON PAGE 4 OF THE ASSESSMENT ORDER. IX. THAT BOTH THE LEARNED COMMISSIONER OF INCOME TAX(AP PEALS), AMRITSAR AND LEARNED ASSESSING OFFICER HAVE FAILED TO APPRECIATE THAT POSSESSION OF LAND FOR CONSTRUCTION PURPOSES WAS HA NDED OVER IN F/YEAR 2006-07 AND NOT IN F/YEAR 2008-09. X. THAT BOTH THE LEARNED COMMISSIONER OF INCOME TAX(AP PEALS), AMRITSAR AND THE ASSESSING OFFICER HAVE FAILED TO A PPRECIATE THAT THE ASSESSEES CASE WAS FULLY COVERED BY SUPREME COURT DECISION IN THE CASE OF M/S DHIR & CO., COLONISERS (P) LTD. VS. CIT IN SPECIAL LEAVE PETITION NO. 5483/2007 REVERSING THE PUNJAB HIGH CO URT DECISION AND ALSO BY DECISION OF SUPREME COURT IN THE CASE OF C IT VS. REALEST BUILDERS & SERVICES LTD. REPORTED AT 307 ITR 202 (S UPREME COURT). XI. THAT LEARNED COMMISSIONER OF INCOME TAX(APPEALS), A MRITSAR HAS FAILED TO EXPLAIN AS TO HOW WERE THE FACTS OF ASSE SSEES CASE DIFFERENT FROM THE FACTS OF APEX COURT DECISION IN THE CASE O F M/S DHIR & CO. (SUPRA) AND REALEST BUILDERS CASE (SUPRA). XII. THAT LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HA S FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAD MADE THE ADDITION WITHOUT REJECTING THE BOOKS OF ACCOUNT OF THE ASSESSEE U/S 145 OF INCOME TAX ACT, 1961. 2) THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE T HAT THE ASSESSEE IS A FIRM FILED ITS RETURN OF INCOME ON 31.03.2010 BY E-FILING DECLARING LOSS OF RS. 2,84,909/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT). THE CASE OF THE ASSESSEE WAS SELECTED UNDER COMPULSORY SCRUTINY AS THE ADDITION MADE FOR THE ASSESSMENT YEAR 2007-08 IN THE CASE HAS BEE N EXCEEDED RS. 10 4 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 LACS. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTI CE TO THE ASSESSEE UNDER SECTION 143(2) OF THE ACT ON 27.09.2010 WHICH WAS D ULY SERVED UPON THE ASSESSEE. THE ASSESSING OFFICER ALSO ISSUED NOTICES UNDER SECTIONS 142(1) & 143(2) OF THE ACT ALONGWITH QUESTIONNAIRE ON 30.0 6.2011 REQUIRING THE INFORMATION FOR THE COMPLETION OF ASSESSMENT, WHICH WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASS ESSEE ALONG WITH ITS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THE ASSES SING OFFICER AND FURNISHED THE REQUIRED INFORMATION FOR COMPLETION O F ASSESSMENT. AS PER THE ASSESSMENT ORDER, THE ASSESSEE-FIRM WAS ESTABLI SHED IN APRIL, 2005 BY THE PARTNERSHIP DEED EXECUTED BETWEEN SH. KAPIL MEH RA, RAJESH BHALLA TO CARRY OUT THE BUSINESS REAL ESTATE, PROPERTIES, COL ONIZERS & DEVELOPERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSEE SUBMITTED THAT OPENING STOCK IS LAND SITUATED AT AJNALA ROAD, AMRI TSAR MEASURING 34 KANAL 6 MARLA WITH A VALUATION OF RS. 1,20,97,000/- . THIS LAND WAS PURCHASED IN THE FINANCIAL YEAR 2005-06. THE ASSESS EE HAS NOT REFLECTED ANY TRANSACTION OF SALE/PURCHASE OF LAND DURING THE YEAR. THE ASSESSEE ALSO SUBMITTED THAT THERE WAS NO SALE, SINCE ITS AC QUISITION IN THE FINANCIAL YEAR 2005-06, EXCEPT SALES OF LAND OF RS. 3.13 CROR ES IN THE PREVIOUS YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR 2008-09. TH E LAND OWNED BY THE ASSESSEE-FIRM HAS BEEN SHOWN IN THE STOCK IN TRADE FOR THE FINANCIAL YEAR 5 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 2005-06. THE ASSESSEE WAS ASKED TO FURNISH LIST OF ADVANCES AS WELL AS LIST OF CREDITORS ALONG WITH THEIR COPIES OF ACCOUNT AS APPEARING IN THE BALANCE SHEET. THE ASSESSEE PROVIDED LIST OF CREDITORS AS W ELL AS LIST OF ADVANCES/DEBTORS. THE ASSESSING OFFICER PERUSED THE SAME WHICH SHOWS SUBSTANTIAL RECEIPTS FROM M/S OMAXE TERMINAL AND PA YMENT OF RS. 5.8 CRORES TO SPLENDOR LANDBASE LTD. BESIDE OTHERS. THE ASSESSEE WAS ENQUIRED TO EXPLAIN NATURE OF PAYMENT RECEIVED FROM M/S OMAXE TERMINAL AS WELL AS PAYMENT MADE TO THE PERSONS, AS MENTIONED BY THE ASSESSING OFFICER AT PAGE 2 OF THE HIS ORDER. IN RE PLY, THE ASSESSEE SUBMITTED THAT THEY ENTERED INTO A COLLABORATION AG REEMENT WITH M/S OMAXE CONSTRUCTION LTD. WHO IS THE REAL ESTATE DEVE LOPER VIDE COLLABORATION AGREEMENT DATED 21.01.2006, TO CONSTR UCT A MALL-CUM- MULTIPLEX AND A HOTEL COMPLEX IN AN AREA OF 3 ACRES (14,520/- SQ. YARD AND TO KEEP THE BALANCE AREA OF 1.29 ACRES FOR FUTU RE DEVELOPMENT). AS REGARDS TO THE PAYMENT MADE TO SPLENDOR LANDBASE, I T WAS EXPLAINED THAT IN EARLIER YEARS THEY HAD ENTERED INTO COLLABORATIO N WITH THE SAID COMPANY TO ACQUIRE LAND FOR DEVELOPMENT AS COLONIZERS, WHIC H PROJECT COULD NOT BE SUCCESSFUL. SO THEY HAD REFUNDED THEM THEIR OUTS TANDING AMOUNT AFTER GETTING FUNDS FROM OMAXE. BY THE COLLABORATION AGR EEMENT ENTERED INTO WITH OMAXE CONSTRUCTION LTD., BOTH THE PARTIES AGRE ED TO MAKE TWO 6 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 ARRANGEMENTS ONE TO DEVELOP & CONSTRUCT THE MALL-CU M-MULTIPLES AS ONE PART OF THE SAID COMMERCIAL COMPLEX ON COLLABORATIO N BASIS AND OTHER FOR DEVELOPMENT CONSTRUCTION AND MANAGEMENT OF THE HOTE L PROJECT AS THE OTHER PART OF THE COMMERCIAL COMPLEX. FURTHER, THE DEVELOPERS HAD ALSO AGREED TO OBTAIN ALL THE PERMISSIONS, APPROVALS AND SANCTIONS IN THEIR OWN NAME FOR THE PURPOSES OF DEVELOPING AND CONSTRUCTIN G THE SAID COMMERCIAL COMPLEX. THE ASSESSING OFFICER REPRODUCE D THE TERMS AND CONDITIONS OF THE AGREEMENT AT PAGE 3 OF THE IMPUGN ED ORDER. 3) AFTER PERUSING THE TERMS AND CONDITIONS OF THE A GREEMENT, THE ASSESSING OFFICER IS OF THE VIEW THAT THE ASSESSEE HAS DEALT WITH THEIR STOCK IN TRADE HOLDING IN A WAY TO EXPLOIT THEIR ST OCK IN TRADE AS ADVENTURE IN NATURE OF TRADE. FOR THIS PURPOSE, THE ASSESSEE HANDED OVER POSSESSING OF THEIR LAND TO DEVELOPERS FOR THE PURPOSE OF CONS TRUCTION OF MULTIPLEX. THE DEVELOPERS ALSO PUT A BOARD OF OMAXE HERITAGE A T THE SITE INDICATING UPCOMING OF MM PROJECT. ASSESSING OFFICER ALSO MENT IONED IN THE ASSESSMENT ORDER THAT THE LAND OF THE ASSESSEE IS S ITUATED ON MOST PRESTIGIOUS ROAD WHICH LEADS TO THE INTERNATIONAL A IRPORT. THE PROJECT OF CONSTRUCTION OF MM PROJECT HAS BEEN UNDERTAKEN BY T HE ASSESSEE ON COMMERCIAL POINT OF VIEW. DURING THE YEAR UNDER CON SIDERATION, THE ASSESSEE RECEIVED SUBSTANTIAL AMOUNT OF RS. 11,45,1 0,338/- FROM 7 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 DEVELOPER AGAINST THEIR STOCK IN TRADE BY VIRTUE OF IRREVOCABLE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE DEVELOPER. TH E DEVELOPER HAS ACQUIRED RIGHT IN THE SUPER AREA TO BUILD ON LAND H OLDING OF THE ASSESSEE TO THE EXTENT OF 73%. AS PER DETAILS FURNISHED BY THE ASSESSEE, THE DEVELOPER HAVE COLLECTED ADVANCE FROM CUSTOMERS AMOUNTING TO RS. 52.06 CRORES AND HAS MADE NET PAYMENT OF RS. 12,43,51,365/- TO T HE ASSESSEE OUT OF WHICH RS. 11,45,10,338/- HAS BEEN PAID BY THE DEVEL OPER TO THE ASSESSEE DURING THE YEAR. ASSESSING OFFICER HAS MENTIONED TH E DETAILS OF THE MONEY RECEIVED FROM THE CUSTOMERS AND PAID TO THE A SSESSEE, AT PAGE 4 IN THE ASSESSMENT ORDER. 4) IN VIEW OF THE AFORESAID SITUATION, THE ASSESSIN G OFFICER IS OF THE VIEW THAT WHAT THE ASSESSEE HAS RECEIVED FROM T HE DEVELOPER IS THE SURPLUS GENERATED BY THE ASSESSEE ON SALE OF THEIR STOCK IN TRADE BY VIRTUE OF ABOVE IRREVOCABLE COLLABORATION AGREEMENT AND TH EREFORE, THE SURPLUS SO RECEIVED DURING THE YEAR SHALL BE CHARGEABLE TO TAX AS BUSINESS INCOME. AS PER THE ACCOUNTING STANDARD FOR THE PERSONS, WHO CARRY ON CONSTRUCTION BUSINESS, THE PROFITS DERIVED FROM STOCK IN TRADE I S COMPUTED UNDER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION. IT APPLIES TO CONSTRUCTION EXECUTED IN PURSUANCE OF CONTRACTS. 8 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 5) AT THE TIME OF ENTERING INTO COLLABORATION AGREE MENT, IT WAS AGREED BETWEEN THE ASSESSEE AND THE DEVELOPERS THAT TOTAL AREA WHICH SHALL BE BUILT IN RESPECT OF ENTIRE COMMERCIAL COMPLEX SH ALL BE 3,50,000/- SQ. FEET OUT OF WHICH THE ASSESSEES SHARE SHALL BE 27 % I.E. 94,500 SQ. FEET. IN OTHER WORDS, FOR ALLOWING 73% SHARE IN TOTAL ARE A OF 3,50,000/- SQ. FEET, THE ASSESSEE GETS 94,500/- BUILT-UP AREA AT T HE COST OF RS. 1600/- PER SQ. FEET. IN OTHER WORDS, FOR ALLOWING 73% SHARE T O THE DEVELOPER, THE ASSESSEE WOULD RECEIVE 94,500/- SQ. FEET BUILT-UP A REA @ OF RS. 1600 PER SQ. FEET., TOTALING RS. 15,12,00,000/-. THE ADDITIO NAL PROFIT IN THE HANDS OF THE ASSESSEE SHALL BE ON ACCOUNT OF SELLING OF HIS SHARE OF SHOPS AND SHOW ROOMS TO THE PROSPECTIVE BUYERS. ON ACCOUNT OF HAND ING OVER 73% INTEREST IN THE MM PROJECTS, THE BUILDER HAS PAID A N AMOUNT OF RS. 11,45,10,338/- TO THE ASSESSEE DURING THE YEAR WHIC H IS THE SURPLUS OF STOCK IN TRADE AND IS ACCORDINGLY TAXABLE IN THIS Y EAR. AS FAR AS THE VALUE OF CLOSING STOCK IS CONCERNED, THE ASSESSEE IS WITH IN HIS RIGHT TO SHOW THE VALUE OF THE CLOSING STOCK @ 27% IN COMPARISON TO 1 00% SHOWN AS THE OPENING STOCK. 6) THE ASSESSEE HAS FILED HIS WRITTEN REPLY WHICH T HE ASSESSING OFFICER HAS REPRODUCED AT PAGE NO. 6 TO 13 IN THE A SSESSMENT ORDER IN WHICH THE ASSESSEE HAS GIVEN VARIOUS REASONS ALONG WITH CASE LAWS 9 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 SUPPORTING ITS CONTENTION. THE ASSESSEE HAS ALSO FI LED ITS REPLY ON MERIT BY MAINLY STATING THAT THE POSSESSION OF LAND HAS BEEN GIVEN TO THE DEVELOPER ONLY FOR CONSTRUCTION OF MM PROJECT AND NO CONVEYAN CE DEED HAS BEEN EXECUTED IN FAVOUR OF THE DEVELOPER. ASSESSEE FURTH ER SUBMITTED THAT IN THE CASE OF THE COLLABORATION AGREEMENT FOR DEVELOP MENT THE CONVEYANCE DEED SHALL BE EXECUTED IN FAVOUR OF THE BUYERS OF S HOPS/SHOW ROOMS IN THE MM PROJECT BY THE ASSESSEE. THE POSSESSION HAS BEEN HANDED OVER TO THE DEVELOPER FOR CONSTRUCTION OF MM PROJECT. AFTER CONSIDERING THE WRITTEN SUBMISSION FILED BY THE ASSESSEE, THE ASSES SING OFFICER IS OF THE VIEW THAT THE POSSESSION OF THE LAND IN DISPUTE HAS BEEN HANDED OVER TO THE DEVELOPER FOR CONSTRUCTION OF MM PROJECT AGAINS T WHICH THE DEVELOPER HAD PAID AMOUNT OF RS. 11,45,10,338/- TO THE ASSESSEE DURING THE FINANCIAL YEAR 2008-09 AND THE RECEIPT IN THE HANDS OF THE ASSESSEE IS SURPLUS OF THEIR STOCK IN TRADE AND ACCORDINGLY THE SAME IS TAXABLE DURING THE YEAR. THE ASSESSEE HAS EARNED THIS RECEIPT AGAI NST REDUCTION OF HIS 100% RIGHT IN THE LAND TO MERELY 27% BY WAY OF ENTE RING INTO IRREVOCABLE AGREEMENT. THIS RECEIPT HAS BEEN RECEIVED ON ACCOUN T OF THEIR LAND CONVERTED AS STOCK IN TRADE BY THE ASSESSEE THEMSEL VES. THE ASSESSEE HAS, THUS, EARNED RECEIPT ON PART PERFORMANCE OF THEIR C ONTRACTUAL OBLIGATION FORMS ADVENTURE IN THE NATURE OF TRADE OR PROFESSIO N. AS REGARDS TO THE 10 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 BOOKING AMOUNT OF RS. 4,60,49,850/- RECEIVED BY THE ASSESSEE DIRECTLY IN RESPECT OF HIS 23% SHARE AS ADVANCE FROM THE PROSPE CTIVE BUYERS FOR SALE OF SHOPS/SHOWROOMS IN THE MM PROJECTS; THIS AMOUNT SHALL BE CONSIDERED FOR COMPUTATION OR PROFIT AT THE TIME OF HANDING OV ER POSSESSION OF THE SHOPS/SHOWROOMS BY THE ASSESSEE AS PER THE TERMS OF ALLOTMENT. AS THE BOOKING AMOUNT RELATES TO SALE OF SHOPS AND SHOW RO OMS TO THE PROSPECTIVE BUYERS, SO REFUND OF ASSURED RETURN ON THESE BOOKING AMOUNTS SHALL BE CONSIDERED IN THE YEAR WHEN THE PO SSESSION OF THE SHOW ROOMS/SHOPS SHALL BE HANDED OVER BY THE ASSESSEE TO THE PROSPECTIVE BUYERS. AFTER CONSIDERING THE WRITTEN REPLY FILED B Y THE ASSESSEE AND DOCUMENTARY EVIDENCE, THE ASSESSING OFFICER ASSESSE D THE AMOUNT OF RS. 11,45,10,338/- AS TRADING RECEIPT, AND NET PROFIT O F RS. 10,53,95,619/- AFTER ALLOWING ADMISSIBLE EXPENDITURE UNDER THE HEA D PROFIT OF THE BUSINESS AND PROFESSION AND COMPLETED THE ASSESSME NT ON 23.12.2011. 7) AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED AN APPEAL BEFORE LEARNED FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 25.10.2012, DISMISSED THE APPEAL FILED BY THE ASSES SEE AND UPHELD THE ORDER OF THE ASSESSING OFFICER. 8) LEARNED COUNSEL FOR THE ASSESSEE HAS FILED HIS W RITTEN SUBMISSION DATED 27.08.2013. AT THE TIME OF HEARING , HE DREW OUR 11 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 ATTENTION TOWARDS WRITTEN SUBMISSION FILED BY HIM A LONG WITH THE CASE LAWS RELIED UPON BY HIM. NO OTHER ARGUMENT HAS BEEN ADVANCED BY THE LEARNED COUNSEL FOR THE ASSESSEE THEREFORE, FOR THE SAKE OF CONVENIENCE, THE WRITTEN SUBMISSIONS DATED 27.08.2013 IS REPRODU CED BELOW: THE HONOURABLE MEMBERS, INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH, AMRITSAR. RESPECTED SIRS, REG :- APPEAL IN THE CASE OF M/S HERITAGE PROJECTS, SHOP N O. 1, NEHRU SHOPPING COMPLEX, LAWRENCE ROAD, AMRITSAR FOR THE A/YEAR 2009-10. KINDLY REFER TO THE APPEAL IN THE ABOVE NOTED CASE. IT IS SUBMITTED THAT THE BASIC FACTS OF THE CASE AR E AS UNDER:- THE ASSESSEE IS DOING BUSINESS OF REAL ESTATE AND I TS OPENING STOCK OF LAND STOOD AT RS. 1,20,97,000/- AND CLOSING STOCK A LSO WAS SHOWN AT THE SAME FIGURE. THE LAND IN THE STOCK WAS BEING DEVELO PED BY OMAXE LTD. IN TERMS OF COLLABORATION AGREEMENT DATED 21.01.2006. THE LAND WAS PURCHASED AS STOCK-IN-TRADE ON 30.09.2005. THE COPI ES OF PURCHASE DEEDS ARE ENCLOSED. THE TRADING ACCOUNT IS AT PAGE 2 OF PAPER BOOK. THE COLLABORATION AGREEMENT IS AT PAGES 9 TO 19 OF THE PAPER BOOK. THE POSSESSING OF THE LAND WAS HANDED OVER TO OMAXE LTD. AT THE TIME OF EXECUTION OF COLLABORATION AGREEMENT ON 21.01.2006 AS PER CLAUSE 2 OF THE SAID AGREEMENT. THE POSSESSION WAS GIVEN BY THE ASSESSEE TO OMAXE LTD. IN ORDER TO FACILITATE THE CONSTRUCTION WORK O F THE COMMERCIAL COMPLEX. THE CLAUSE 2 OF THE AGREEMENT READS AS UND ER:- THAT THE FIRST PARTY HAS HANDED OVER THE POSSESSIO N OF THE SAID LAND TO THE SECOND PARTY FOR TABLE SURVEY, LEV ELING AND TO 12 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 DO ALL TECHNICAL FEASIBILITY OF THE SAID COMMERCIAL COMPLEX ON THE SAID LAND FOR PREPARING PLANS, DESIGNS ETC. ON SIGNING OF THIS AGREEMENT. IT WILL THUS BE NOTED THAT THE POSSESSION OF LAND W AS GIVEN TO THE DEVELOPER ON 21.01.2006, WHICH FALLS IN THE A/YEAR 2006-07 & NOT IN A/YEAR 2009-10 AT THE TIME OF RECEIVING THE ADVANCE AS ALLEGED BY THE A.O. IT IS SUBMITTED THAT CONSTRUCTION OF THE COMPLEX ST ARTED IN A/YEAR 2007-08 & THE PROJECT IS YET TO BE COMPLETED. AGAIN THE POSSESSION GIVEN IS FOR DEVELOPMENT OF TH E LAND AS A COMMERCIAL COMPLEX & NOT FOR SELLING THE SAME. THE ASSESSEE RETAINED THE RIGHT TO SELL THE PROPERT Y AND OMAXE LTD. WAS GIVEN NO POWERS TO SELL THE PROPERTY. OMAXE LTD. WA S AUTHORIZED TO RECEIVE BOOKING AMOUNTS ONLY WHILE THE RIGHT TO SEL L THE PROPERTY WAS RETAINED BY THE ASSESSEE FIRM. THIS IS EVIDENT FROM PARA 35 OF THE COLLABORATION AGREEMENT DATED 21.01.2006, WHICH IS REPRODUCED AS UNDER:- THAT THE FIRST PARTY SHALL EXECUTE AND REGISTER THE SALE DEED(S) OR SUCH OTHER DOCUMENTS, OR INSTRUMENT(S) I N FAVOUR OF INTENDING PURCHASER(S) OF UNIT(S), SPACE(S), CAR PARKING ETC. IN RESPECT OF THE UNIT, SPACE ETC., AGREED TO BE SO LD TO DIFFERENT INTENDING PURCHASER BY THE SECOND PARTY AT THE COST AND EXPENSE OF THE SAID INTENDING PURCHASER AND SHALL G IVE THE SAID INTENDING PURCHASER TITLE AS MAY BE PERMISSIBL E BY PRESENT OF FUTURE LAWS ON THE TERMS AND CONDITIONS OF THIS AGREEMENT. THE SECOND PARTY WILL EXERCISE THIS POWE R OF ATTORNEY THROUGH THE REGISTERED POWER OF ATTORNEY I N ITS FAVOUR EXECUTED BY THE FIRST PARTY AFTER HANDING OV ER THE AREA FALLING TO THIS SHARE OF THE FIRST PARTY. YOUR HONOUR WILL KINDLY NOTICE THAT IT IS APPARENT FROM PARA 35 OF THE COLLABORATION AGREEMENT THAT RIGHT IN THE PROPERTY OF THE ASSESSEE WAS TO BE CONFERRED UPON, OMAXE LTD. THROUGH A REGIST ERED POWER OF 13 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 ATTORNEY EXECUTED BY THE ASSESSEE ONLY AFTER OMAXE LTD. HANDED OVER THE SHARE OF THE AREA FALLING TO THE ASSESSEE. SINC E THE SHARE OF THE ASSESSEE FIRM HAS NOT BEEN HANDED OVER TO THE ASSES SEE, IT HAS NOT EXECUTED ANY POWER OF ATTORNEY TO OMAXE LTD.. IN ABSENCE OF ANY ISSUE OF POA BY THE ASSESSEE TO OMAXE LTD. NO SALE COULD BE EXECUTED BY OMAXE LTD. & NO SALE DEED HAS BEEN EXECUTED. IT IS FURTHER SUBMITTED THAT THE ENTIRE PROJECT IS AWAITING FOLLOWING APPROVALS WITHOUT WHICH RISKS & REWARDS OF THE PROP ERTY UNDER CONSIDERATION COULD NOT BE TRANSFERRED:- 1. COMPLETION CERTIFICATE BY PUDA WITHOUT WHICH SAL ES CANNOT BE AFFECTED. 2. NOC FROM PUNJAB STATE POLLUTION CONTROL BOARD. 3. ELIGIBILITY CERTIFICATE AND EXTENSION OF THE PER MISSION/SPECIAL PACKAGE UNDER THE MEGA PROJECTS GIVEN TO OMAXE BY D IRECTOR OF INDUSTRIES AND COMMERCE, PUNJAB FOR SETTING UP O F MULTIPLEX CUM SHOPPING MALLS WHICH EXPIRED ON 31.12.2008, WHI CH PROVIDES THE FOLLOWING BENEFITS:- OBTAINING 100% EXEMPTION FROM ENTERTAINMENT TAX FRO M MULTIPLEX FOR 10 YEARS. EXEMPTION FROM PAYMENT OF STAMP DUTY ON THE PURCHAS E OF THE PROPERTY BY THE BENEFICIARY EXCLUSION OF BASEMENT FROM FAR EXEMPTION FROM BASIC ELECTRICITY DUTY FROM A PERIOD FOR 5 YEARS FOR MULTIPLEX RELAXATION UNDER SHOPS AND ESTABLISHMENTS ACT BY TH E LABOUR DEPARTMENT TO PERMIT 24 HOUR OPERATION GRANT OF FAR OF 3, GROUND COVERAGE OF 50% AND HEIGH T OF 150FT/35 METERS 4. NOC FROM THE FIRE DEPARTMENT, AMRITSAR. 14 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 5. SANCTION FROM CHIEF ENGINEER (COMMERCIAL), PSEB , PATIALA FOR GRANT OF ELECTRICITY CONNECTION FOR THE COMPLEX. IT MAY BE ONCE AGAIN MENTIONED THAT WITHOUT OBTAINI NG THE APPROVALS FROM FIRE DEPARTMENT, POLLUTION DEPARTMENT AND COMP LETION CERTIFICATE FROM PUDA, NEITHER CONSTRUCTIVE POSSESSION CANNOT B E HANDED OVER NOR THE CONVEYANCE DEED CAN BE EXECUTED. THE FOLLOWING WORKS ARE PENDING EVEN ON DATE:- ELECTRIC CONNECTION AND ELECTRIC INSTALLATIONS GENSETS TRANSFORMERS, HT LINE, APPLYING, GETTING SANCTIONED AND INSTALLED ELECTRIC CONNECTION INSTALLATION AND OPERATION OF AIR CONDITIONING EQUI PMENTS COMMISSIONING OF SEWERAGE TREATMENT PLANT TOTAL FLOORING INTERNAL AND EXTERNAL IS PENDING LIGHTING INTERNAL AND EXTERNAL GRILLS, RAILINGS INSTALLATION AND COMMISSIONING OF LIFTS AND ELEVAT ORS COMMISSIONING OF BATHROOMS COMPLETION OF OUTER ELEVATION, ATRIUM, PODIUM AND E XTERNAL OUTDOOR AREA OPERATIONALIZATION OF BASEMENT AND PAR KING AREAS. THE A.O. OBSERVES THAT WHAT ASSESSEE HAS RECEIVED F ROM DEVELOPERS IS THE SURPLUS GENERATED BY THE ASSESSEE FROM SALE OF THEI R STOCK IN TRADE BY VIRTUE OF ABOVE IRREVOCABLE COLLABORATION AGREEMENT AND THEREFORE THE SURPLUS SO RECEIVED DURING THE YEAR SHALL BE CHARGE ABLE TO TAX AS BUSINESS. IT IS FURTHER SUBMITTED THAT THE A.O. HAS OPINED TH AT WHERE THERE ARE RECEIPTS, PROPORTIONATE PROFITS ON A SOUND AND REAS ONABLE BASIS CAN BE CONSISTENTLY DETERMINED AND OFFERED. THE A.O. HAS FURTHER OPINED THAT IN A SITUATION WH ERE THE LAND OWNER MERELY EXECUTES THE AGREEMENT FOR SALE, EXECUTES A GENERAL POWER OF ATTORNEY RECEIVES THE CONSIDERATIONS AND DELIVERS P OSSESSION OF THE PROPERTY AS STOCK-IN-TRADE, IN PART PERFORMANCE OF THE CONTRACT, THE 15 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 CONSIDERATION RECEIVED ON SUCH PART PERFORMANCE, DU RING THE YEAR SHALL BE CREDITED IN THE TRADING ACCOUNT OF THE ASSESSEE. IT IS SUBMITTED THAT THE A.O. HAS MISCONSTRUED THAT THE ASSESSEE IS DOING CONSTRUCTION BASIS. THE ASSESSEE IS NOT INTO CONSTR UCTION BUSINESS AS A CONTRACTOR. THE ASSESSEE IS A DEALER OF LAND WHO HA S ENTERED INTO COLLABORATION AGREEMENT WITH A DEVELOPER TO DEVELOP ITS LAND. IT IS THEREFORE SUBMITTED THAT THE REFERENCE MADE B Y THE A.O. TO THE ACCOUNTING STANDARD -7 AND CASE LAWS RELATING THERE TO IS TOTALLY MISPLACED. IT IS SUBMITTED THAT SINCE ASSESSEE IS N OT INTO BUSINESS OF CONSTRUCTION, THE CASE LAWS AND ACCOUNTING STANDARD -7 RELIED UPON BY THE A.O. ARE NOT APPLICABLE. THE A.O. HAS WRONGLY INFERRED THAT THE ASSESSEE HAS EXECUTED A GENERAL POWER OF ATTORNEY IN FAVOUR OF THE DEVELOPER WITHOU T LEADING ANY EVIDENCE TO THIS EFFECT. THIS ASSERTION OF THE A.O. IS ABSOLUTELY INCORRECT. YOUR HONOUR WILL KINDLY APPRECIATE THAT THE A.O. HA S TREATED THE RECEIPT OF ADVANCE AGAINST BOOKINGS AS SALE PROCEEDS OF T HE ASSESSEE. THE A.O. HAS GROSSLY ERRED IN APPLYING THE JUDGMENT OF SUPREME COURT IN THE CASE OF P.M. MOHAMMED MEERKHAN VS. CIT REPORTED AT 73 ITR 7 35 (SUPREME COURT) IN THE CASE OF THE ASSESSEE WITHOUT APPRECIATING T HE FACTS. IN THE CASE RELIED UPON BY THE A.O. THE PLOT S UNDER CONSIDERATION WERE ACTUALLY SOLD BY THE ASSESSEE. IN SUCH CIRCUMS TANCES THE UNSOLD PLOT WAS TREATED AS STOCK-IN-TRADE. THIS CASE HAS NO APP LICATION TO ASSESSEES CASE. MOREOVER, IN THE CASE OF THE ASSESSEE, IT IS SHOWIN G THE PLOT AS STOCK-IN- TRADE ITSELF AND THERE HAS BEEN NO SALE OF ANY PART OF THE LAND. THE RELIANCE PLACED BY THE A.O. ON APEX COURT DECISION REFERRED ABOVE IS THEREFORE TOTALLY MISPLACED. IT IS THEREFORE SUBMITTED THAT THE OBSERVATIONS MAD E BY THE A.O. ARE TOTALLY ILLEGAL & OPPOSED TO THE FACTS. THE CASE LA WS RELIED UPON IS NOT APPLICABLE TO THE FACTS OF THE CASE. THE A.O. IS TR EATING THE RECEIPT OF ADVANCE AS INCOME OF THE ASSESSEE WITHOUT SHOWING THAT SALE STOOD COMPLETED. 16 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 IT IS SUBMITTED THAT THE AMOUNT SPENT BY OMAXE LTD . ON CONSTRUCTION OF THE PROPERTY HAS NOT DOUBT RAISED THE VALUE OF ASSE SSEES LAND HELD AS STOCK-IN-TRADE. HOWEVER, THE ASSESSEE HAS NOT REALI ZED THAT INCREASED VALUE AS IT HAS NOT TRANSFERRED ANY PART OF ITS RIG HT IN THE LAND TILL DATE. THE ADVANCE RECEIVED BY OMAXE LTD., CANNOT BE TREAT ED AS INCOME OF THE ASSESSEE, AS INCOME IS REALIZED ONLY A SALE OF THE PROPERTY. YOUR KIND ATTENTION IS INVITED TO THE DEFINITION OF SALE OF IMMOVABLE PROPERTY IN SECTION 54 OF THE TRANSFER OF PROPERTY ACT, 1882. SALE IS A TRANSFER OF OWNERSHIP IN EXCHANGE FOR A PRICE PAID OR PROMISED OR PART-PAID AND PART-PROMISED. SALE HOW MADE : SUCH TRANSFER, IN THE CASE OF TANGI BLE IMMOVABLE PROPERTY OF THE VALUE OF RS. 100 AND UPWARDS, OR IN THE CASE OF REVERSION OR OTHER INTANGIBLE THING, CAN BE MADE ON LY BY A REGISTERED INSTRUMENT. IN THE CASE OF TANGIBLE IMMOVABLE PROPERTY OF A VAL UE LESS THAN RS. 100, SUCH TRANSFER MAY BE MADE EITHER BY REGISTERED INST RUMENT OR BY DELIVERY OF THE PROPERTY. DELIVERY OF TANGIBLE IMMOVABLE PROPERTY TAKES PLACE WHEN THE SELLER PLACES THE BUYER OR SUCH PERSON AS HE DIRECTS, IN P OSSESSION OF THE PROPERTY. CONTRACT OF SALE: A CONTRACT FOR THE SALE OF IMMOVA BLE PROPERTY IS A CONTRACT THAT A SALE OF SUCH PROPERTY SHALL TAKE PL ACE ON TERMS SETTLED BETWEEN THE PARTIES. IT DOES NOT, OR ITSELF, CREATE ANY INTEREST IN OR C HARGE ON SUCH PROPERTY. AS THE ASSESSEE HAS BEEN DEALING IN IMMOVABLE PROPE RTY, THE ABOVE DEFINITION OF SALES WILL APPLY TO THE ASSESSEE. THE EXTENDED DEFINITION OF TRANSFER GIVEN UNDER SECTION 2(47)(V) IS ALSO NOT APPLICABLE TO THE ASSESSEE AS IT IS APPLICABLE ONLY IN CASE OF TRANSF ER OF CAPITAL ASSET. YOUR HONOUR WILL KINDLY APPRECIATE THAT NO SALE HAS TAKE N PLACE WITH REGARD TO 17 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 LAND/BUILDING OF THE ASSESSEE/DEVELOPER DURING THE YEAR WITHIN THE MEANING OF SECTION 54 OF TRANSFER OF PROPERTY ACT. AS SUCH, NO PROFIT COULD ACCRUE TO THE ASSESSEE. YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF SUPREME COURT OF INDIA IN THE CASE OF DHIR & CO. COLONISORS PVT. LTD . VS. CIT IN WHICH JUDGMENT OF PUNJAB HIGH COURT REPORTED AT 288 ITR 5 61 (P&H), WAS REVERSED. THE SUPREME COURT HELD THAT ADVANCES RECE IVED FROM CUSTOMERS BY THE COLONIZERS COULD NOT BE TREATED AS INCOME OF THE ASSESSEE AS INCOME DID NOT ACCRUE TO THE ASSESSEE T ILL THE DATE OF EXECUTION OF CONVEYANCE DEED (PAGES 47 & 48 OF PAPE R BOOK). YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF HASMUKH LAL M. PARIKH VS. CIT 37 ITR 359 (BOM), WHERE IT WAS HELD AS UNDER:- INCOME-ACCRUAL-PROFIT ON SALE OF LAND-EARNEST MONE Y RECEIVED FOR SALE OF LAND-SALE DEED EXECUTED IN THE LATTER YEAR- EARNEST MONEY COULD NOT BE TREATED AS PART OF PRICE OF LAND-ENTIRE PROF IT ACCRUED TO THE ASSESSEE IN THE LATER YEAR (PAGES 44 TO 46 OF PAPER BOOK). YOUR KIND ATTENTION IS INVITED TO THE DECISION OF CIT VS. ASHALAND CORPORATION 133 ITR 55 (GUJ.), WHERE IT WAS HELD AS UNDER:- INCOME-ACCRUAL-ARISING ON SALE OF LAND-ARISES IN TH E YEAR IN WHICH TITLE IN THE PROPERTY WAS TRANSFERRED AND NOT IN TH E YEAR IN WHICH THE ASSESSEE RECEIVED PART CONSIDERATION AND EARNEST MO NEY-BUSINESS OF ASSESSEE IS TO PURCHASE & SELL LAND-TRANSACTION OF SALE BECOMES COMPLETE ONLY ON PASSING OF THE TITLE WHICH TAKES P LACE ONLY WHEN REGISTERED SALE DEED IS EXECUTED. MERE RECEIPT OF E ARNEST MONEY AND ADVANCE RECEIPT OF MONEY TOWARDS TRANSACTION WOULD NOT, BY ITSELF PARTAKE THE CHARACTER OF TAXABLE INCOME AS REGD. DE ED WAS EXECUTED ONLY IN THE SUBSEQUENT YEAR (PAGES 39 TO 43 OF THE PAPER BOOK). IT IS FURTHER SUBMITTED THAT IN THE SUPREME COURT D ECISION IN THE CASE OF CIT VS. REALEST BUILDERS & SERVICES LTD. REPORTED A T 307 ITR 202 (S.C.) , IT WAS HELD AS UNDER:- INCOME-ACCRUAL-SALE OF PLOTS VIS--VIS METHOD OF A CCOUNTING- CONTENTION OF THE ASSESSEE WAS THAT INCOME DID NOT ACCRUE TO IT TILL THE 18 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 DATE OF CONVEYANCE SINCE THERE WAS NO TRANSFER OF R IGHT, TITLE AND INTEREST UPTO THE DATE OF EXECUTION OF CONVEYANCE A ND, THEREFORE, THERE WAS NO ACCRUAL OF INCOME AT THE TIME OF EXECUTION O F THE TRIPARTITE AGREEMENT WHEN THE ASSESSEE RECEIVED CONSIDERATION. AS PER SEC. 145, IT IS OPEN TO THE DEPARTMENT TO INSIST ON CHANGE IN TH E METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IF IT RESULTS I N UNDER-ESTIMATION OF PROFITS/NET INCOME- IF THE A.O. COMES TO THE CONCL USION THAT THERE IS UNDER-ESTIMATE OF PROFITS, HE MUST GIVE RELEVANT FA CTS AND FIGURES IN THAT REGARD AND DEMONSTRATE THAT THE METHOD OF ACCOUNTIN G ADOPTED BY THE ASSESSEE RESULTS IN UNDER ESTIMATION OF PROFITS- TH ERE WAS NEITHER ALLEGATION NOR SUCH EXERCISE WAS UNDERTAKEN IN THIS CASE-THEREFORE, NO INTERFERENCE IS WARRANTED WITH THE CONCLUSION OF TH E TRIBUNAL AND THE HIGH COURT ACCEPTING THE CLAIM OF THE ASSESSEE (PAG ES 36 TO 38 OF THE PAPER BOOK). YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF PUNJAB HIGH COURT DATED 29.01.2013 IN CASE OF SHAIL MOTILAL & SANJEEV LAL APPEARING AT PAGE 73 TO 76 OF PAPER BOOK II. YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF GUJARAT HIGH COURT IN THE CASE OF RATNA TRAYI REALITY SERVICE PVT. LTD . APPEARING AT PAGES 77 TO 87 OF PAPER BOOK II, YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF I.T.A.T. HYDERABAD BENCH IN THE CASE OF M/S OMEGA SHELTERS PVT. LTD. I N I.T.A. NO. 798 & 799/HYD/2010 DATED 18.02.2011 . THE FINDINGS ARE REPRODUCED AS UNDER:- WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PA RTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF T HE AUTHORITIES BELOW. THE A.O. IN HIS REPORT TO THE CIT(A) CLEARLY MENTIO NED THAT THE ASSESSMENT WAS NOT BASED ON THE SEIZED MATERIAL BUT , IT IS BASED ON ONLY OR WRONG ACCOUNTING STANDARDS FOLLOWED BY THE ASSES SEE COMPANY IN RECOGNIZING THE REVENUE AND HENCE, THE ONLY ISSUE I S TO BE ADJUDICATED UPON IN THIS APPEAL IS WHETHER THE A.O. IS RIGHT IN REJECTING THE ACCOUNTING METHOD REGULARLY EMPLOYED BY THE ASSESSE E AND SUBSTITUTING THE SAME WITH ACCOUNTING METHOD AS PER AS-7 AND COM PUTATION OF PROFIT BASED ON THE SAME. THE ASSESSEE CONTENDS THA T THE METHOD OF ACCOUNTING FOR RECOGNITION OF REVENUE IS REGULARLY EMPLOYED BY THE ASSESSEE AND OTHER GROUP COMPANIES AND TO THIS EFFE CT THE ASSESSEE HAD 19 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 FILED COPIES OF THE STATEMENTS OF ACCOUNTS OF SOME OF THE GROUP COMPANIES WHERE ASSESSMENTS WERE COMPLETED U/S 143( 3) OF THE ACT BY THE ASSESSING OFFICERS. THE CATEGORICAL FINDING OF THE CIT(A) IS THAT THE A.O. SIMPLY BY REJECTING THE METHOD OF ACCOUNTING F OLLOWED BY THE ASSESSEE IS NOT PROPER SINCE ASSESSMENTS HAVE BEEN COMPLETED IN OTHER GROUP CASES BASED ON THE SAME ACCOUNTING METHOD. WE FIND FORCE IN THE FINDING OF THE CIT(A) FOR THE REASON THAT SINCE THE ASSESSING OFFICER REJECTED THE METHOD OF ACCOUNTING FOLLOWED BY THE A SSESSEE BUT HE ACCEPTED THE SAME METHOD OF ACCOUNTING FOLLOWED BY GROUP COMPANIES OF THE ASSESSEE, WHICH IS CONTRARY AS PER LAW. THE ASSESSING OFFICER HAS NOT GIVEN A CLEAR MANDATED U/S 145(3) OF THE AC T AND YET RECOMPUTED THE PROFIT FROM THE PROJECTS DONE BY THE ASSESSEE COMPANY. THE ADDITIONS MADE BY THE ASSESSING OFFICER ARE NOT SUPPORTED BY ANY FACTS AND FIGURES WHICH CAN DEMONSTRATE THAT THE IM PUGNED METHOD OF ACCOUNTING POLICY ADOPTED BY THE ASSESSEE COMPANY R ESULTED IN UNDER ESTIMATION OF PROFIT. ALTHOUGH THE ASSESSING OFFICE R DISCUSSED IN DETAIL ABOUT THE ACCOUNTING ASPECTS IN HIS ORDER, HOWEVER NO CONCLUSION HAS BEEN REACHED BY THE ASSESSING OFFICER. THE ASSESSIN G OFFICER HAS TAKEN ESTIMATED REVENUE FROM THE PROJECTS WITHOUT CONSIDE RING THE FACT THAT WHETHER THE UNITS ARE SOLD OR NOT. IN OTHER WORDS P ROFIT IS BEING ESTIMATED ON UNSOLD STOCK ALSO. WE FIND THAT PRE-RE VISED AS-7 ISSUED BY THE ICAI IN THE YEAR 1983 SPECIFICALLY INCLUDED COM PANIES UNDERTAKING CONSTRUCTION ACTIVITIES ON THEIR OWN, BUILDERS AND DEVELOPERS. AS PER REVISED AS-7 IN THE YEAR 2002, SUCH SPECIFIC INCLUS ION WAS MISSING. HENCE, IN OUR CONSIDERED OPINION, AS-7 DOES NOT APP LY TO THE BUILDERS AND REAL ESTATE DEVELOPERS. THE METHOD FOLLOWED BY THE ASSESSEE COMPANY CANNOT BE CALLED AS AN UNREASONABLE METHOD AND ANY CHANGE IN THE METHOD WOULD ONLY BE TAX NEUTRAL. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) AS THE SAME HA S BEEN PASSED BY THE CIT(A) AFTER ANALYZING AND EXAMINING THE ISSUE ELAB ORATELY. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS RAISED FOR BOTH THE YEARS BY THE REVENUE IN THIS REGARD (PAGES 54 TO 58 OF THE PAPER BOOK). THE ABOVE DECISIONS HAVE BEEN TOTALLY IGNORED BY TH E A.O. WITHOUT DISTINGUISHING THE SAME WITHOUT EVEN SAYING A SINGL E WORD AS TO WHY THESE JUDGMENTS ARE NOT APPLICABLE TO THE ASSESSEE S CASE. 20 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF I.T.A.T. AHMEDABAD IN THE CASE OF ACIT/DCIT CIRCLE 2(2) VS. NATIONAL B UILDERS REPRODUCED BELOW: APPLICABILITY OF AS-7 TO DEVELOPER- ASSESSEE ENGAGED IN BUSINESS OF CONSTRUCTION OF CIVIL WORK AND ROAD CONSTRUCTION AS A CONTRACTOR, HAD ENTERED INTO AN AGREEMENT WITH GSRTC FOR THE DEVELO PMENT OF A SHOPPING COMPLEX REVENUE ON OBSERVATION THAT ASSE SSEE WAS AUTHORIZED TO COLLECT ADVANCES FROM THE CUSTOMERS, OPINED THAT THE ASSESSEE SHOULD HAVE DECLARED PROFIT OF THE SAID PR OJECT ON PERCENTAGE OF COMPLETION METHOD HELD THAT:- FACTS REVEAL THAT A SSESSEE WAS DEVELOPING THE COMMERCIAL COMPLEX AND, THEREFORE, A CTING AS A DEVELOPER. ALSO, UNITS OF COMPLEX WERE TO BE TRANSF ERRED TO LESSEES ON APPROVAL OF GSRTC, WHICH WAS NOT RECEIVED TILL THE END OF THE ACCOUNTING PERIOD. FURTHER, SINCE ONLY PART MONEY WAS RECEIVED , HENCE SHOWN AS AN ADVANCE AND SALES WERE NOT MATERIALIZED TILL THE EN D OF THE YEAR. SINCE THE ASSESSEE CAN BE TERMED AS A CONTRACTOR AS ALSO A DEVELOPER, THEREFORE THE REVENUE CAN BE RECOGNIZED IN TERMS OF AS-9 AND NOT AS-7. IT WAS WRONG ON THE PART OF THE A.O. TO ASSESSEE TH E INCOME IRRESPECTIVE OF THE YEAR OF COMPLETION OF PROJECT WHEN THE AMOUN T RECEIVED IN ADVANCE HAS NOT REACHED CERTAINTY AND THAT TOO THE A.O. HAS MERELY ESTIMATED 10% AS THE RECOGNITION OF REVENUE OF THE CONSTRUCTI ON CONTRACT, WITHOUT ASSIGNING ANY SPECIFIC BASIS OF SUCH ESTIMATION. TH US, PERCENTAGE COMPLETION METHOD COULD NOT BE APPLIED. DELETION OF ADDITION UPHELD DECIDED IN FAVOUR OF ASSESSEE. (PAGE 59 OF THE PAPER BOOK). YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT, CENTRAL-I, AMRITSAR VS. MANISH BUI LD WELL PVT. LTD. REPORTED AT 204 TAXMAN 106(DELHI), WHERE IT WAS HELD AS UNDER:- SECTION 145 OF THE INCOME TAX ACT, 1961 METHOD OF ACCOUNTING SYSTEM OF ACCOUNTING ASSESSEE-COMPANY WAS ENGAGED IN BUSINESS OF DEVELOPMENT OF REAL ESTATE PROJECTS ASSESSING OFF ICER MADE CERTAIN ADDITION TO ITS INCOME ON GROUND THAT ASSESSEE WAS ADOPTING PROJECT COMPLETION METHOD OR COMPLETED CONTRACT METHOD, WHI CH WAS NOT PROPER AND PROFITS OF BUSINESS SHOULD BE COMPUTED O N THE BASIS OF PERCENTAGE COMPLETION METHOD UNDER WHICH PROFITS OF DEVELOPMENT AND CONSTRUCTION BUSINESS OF ASSESSEE GOT ASSESSED OVER A PERIOD OF YEARS, 21 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 KEEPING PACE WITH PROGRESS IN CONSTRUCTION/DEVELOPM ENT OF PROJECT ON APPEAL, COMMISSIONER (APPEALS) DELETED ADDITION HOL DING THAT PROJECT COMPLETION METHOD IS A WELL-RECOGNIZED AND ACCEPTED METHOD OF ACCOUNTING AND WAS ONLY METHOD SUITABLE FOR ANY DEV ELOPER WHO HAS TO DELIVER A COMPLETED PRODUCT TO BUYER HE ALSO RECO RDED FINDING THAT THERE WAS NO MANIPULATION IN BOOKS OF ACCOUNT AFO RESAID FINDING OF COMMISSIONER (APPEALS) WAS APPROVED BY TRIBUNAL WIT H OBSERVATION THAT DEPARTMENT HAD ACCEPTED ASSESSEES METHOD OF A CCOUNTING, NAMELY, PROJECT COMPLETION METHOD IN EARLIER YEARS AND, THE REFORE, THERE WAS NO JUSTIFICATION FOR ADOPTING PERCENTAGE COMPLETION ME THOD FOR ONE YEAR ON SELECTIVE BASIS WHETHER IT COULD BE SAID THAT PROJECT COMPLETION METHOD FOLLOWED BY ASSESSEE WOULD RESULT IN DEFERME NT OF PAYMENT OF TAXES WHICH ARE TO BE ASSESSED ANNUALLY UNDER ACT HELD, NO WHETHER, THEREFORE, TRIBUNAL WAS JUSTIFIED IN DELET ING ADDITION MADE BY ASSESSING OFFICER HELD, YES (IN FAVOUR OF ASSESSE E) (PAGES 50 TO 53 OF PAPER BOOK). IT IS SUBMITTED THAT THE JUDICIAL DISCIPLINE DEMAND S THAT LOWER AUTHORITIES FOLLOW THE DECISIONS OF SUPERIOR COURTS. THE A.O. R EFUSED TO FOLLOW THE APEX COURT DECISIONS WITHOUT EVEN REFERRING TO THE SAME AS TO WHY THESE WERE NOT APPLICABLE. IT IS FURTHER SUBMITTED THAT ASSESSEE IS HOLDING TH E LAND AS STOCK-IN-TRADE AND NOT AS A CAPITAL ASSET. THE EXTENDED DEFINITI ON OF TRANSFER AS GIVEN SECTION 2(47)(V) IS NOT APPLICABLE TO THE ASS ESSEE. IF THE ASSESSEE HAD HELD THE LAND AS A CAPITAL ASSET THEN THE PRO VISION OF SECTION 2(47)(V) COULD BE MADE APPLICABLE. SUB-CLAUSE (V) W AS ADDED TO SECTION 2(47) BY FINANCE ACT, 1987 W.E.F. 01.04.1988. THE D EPARTMENTAL CIRCULAR NO. 495 DATED 22.09.1987 EXPLAINED THE BACKGROUND F OR INTRODUCING THIS SUB-CLAUSE AS UNDER:- DEFINITION OF TRANSFER WIDENED TO INCLUDE CERTAIN TRANSACTIONS. THE EXISTING DEFINITION OF THE WORD TRANSFER IN SECTI ON 2(47) DOES NOT INCLUDE TRANSFER OF CERTAIN RIGHTS ACCRUING TO A PU RCHASER, BY WAY OF BECOMING A MEMBER OF OR ACQUIRING SHARES IN A CO-OP ERATIVE SOCIETY, COMPANY, OR ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT WHEREBY SUCH PERSON ACQUIRES ANY RIGHT IN ANY BUILDING WHICH IS EITHER BEING CONSTRUCTED OR WHICH IS TO BE CONSTRUCTED. TRANSACTIONS OF THE NATURE REFERRED TO ABOVE ARE NO T REQUIRED TO BE 22 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 REGISTERED UNDER THE REGISTRATION ACT, 1908. SUCH A RRANGEMENTS CONFER THE PRIVILEGES OF OWNERSHIP WITHOUT TRANSFER OF TIT LE IN THE BUILDING AND ARE A COMMON MODE OF ACQUIRING FLATS PARTICULARLY I N MULTISTORIED CONSTRUCTIONS IN BIG CITIES. THE DEFINITION ALSO DO ES NOT COVER CASES WHERE POSSESSION IS ALLOWED TO BE TAKEN OR RETAINED IN PART OF PERFORMANCE OF A CONTRACT, OF THE NATURE REFERRED T O IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. NEW SUB-CLAUSES (V) AND (VI) HAVE BEEN INSERTED IN SECTION 2(47) TO PREVENT AVOIDANCE OF CAPITAL GAINS LIABILITY BY RECOURSE TO TRANSFER OF RIGHTS IN THE MANNER REFERRED TO ABOVE. THE NEWLY INSERTED SUB-CLAUSE (VI) OF SECTION 2(47) HAS BROUGHT INTO THE AMBIT OF TRANSFER, THE PRACTICE OF ENJOYMENT OF P ROPERTY RIGHTS THOUGH WHAT IS COMMONLY KNOWN AS POWER OF ATTORNEY ARRANGE MENTS. THE PRACTICE IN SUCH CASES IS ADOPTED NORMALLY WHERE TR ANSFER OF OWNERSHIP IS LEGALLY NOT PERMITTED. A PERSON HOLDING THE POWE R OF ATTORNEY IS AUTHORIZED THE POWERS OF OWNER, INCLUDING THAT OF M AKING CONSTRUCTION. THE LEGAL OWNERSHIP IN SUCH CASES CONTINUES TO BE W ITH THE TRANSFEROR. YOUR HONOUR WILL KINDLY NOTICE THAT, SEC. 53A OF TR ANSFER OF PROPERTY ACT DEALS WITH DOCTRINE OF PART PERFORMANCE. IT IS AN E QUITABLE DOCTRINE OF PART PERFORMANCE WHICH DOES NOT CONFER ANY TITLE ON THE TRANSFER IN POSSESSION BUT MERELY IMPOSES A STATUTORY BAR ON TH E TRANSFEROR. YOUR KIND ATTENTION IS ALSO INVITED TO THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. RELIANCE INTERNATIONAL CORP. PV T. LTD. REPORTED AT 211 ITR 666 (DEL) WHERE THE TIME IMPORT OF THE PROVISIONS OF SEC. 53 A READ WITH SEC. 2(47)(V) HAS BEEN BROUGHT OUT. THE F OLLOWING FINDINGS OF THE DELHI HIGH COURT ARE REPRODUCED. SECTION 53A OF THE TRANSFER OF PROPERTY ACT DEALS WITH THE DOCTRINE OF PART PERFORMANCE, IT IS AN EQUITABLE DOCTRINE OF PA RT PERFORMANCE IN VOGUE IN ENGLAND AND WAS PARTIALLY IMPORTED INTO TH IS COUNTRY BY ENACTING SECTION 53A. THIS SECTION DOES NOT CONFER ANY TITLE ON THE TRANSFEREE IN POSSESSION BUT MERELY IMPOSES A STATU TORY BAR ON THE TRANSFEROR. THE DOCTRINE OF PART PERFORMANCE IS A D EFENCE. IT IS A SHIELD AND NOT A SWORD. IT IS A RIGHT TO PROTECT THE TRANS FEREES POSSESSION AGAINST ANY CHALLENGE TO IT BY THE TRANSFEROR CONTR ARY TO THE TERMS OF THE CONTRACT. IT IS NOW BY AMENDING SECTION 2(47) OF TH E ACT INTRODUCING 23 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 SUB-CLAUSE (V) THAT A TRANSACTION FALLING WITHIN TH E PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT HAS BEEN TREATE D AS TRANSFER IN RELATION TO CAPITAL ASSETS. SUCH A DEFINITION OF TR ANSFER CANNOT BE APPLIED WHEN WE LOOK AT SECTION 53A OF THE TRANSFER OF PROPERTY ACT INDEPENDENTLY OF THE WORD TRANSFER AS DEFINED IN SECTION 2(47) OF THE ACT (PAGE 49 OF THE PAPER BOOK). IT IS THEREFORE SUBMITTED THAT PART PERFORMANCE U/S 53A OF THE TRANSFER OF PROPERTY ACT CAN BE TREATED AS TRANSFER ONLY U/S 2( 47)(V) OF THE INCOME TAX ACT, 1961, WHICH APPLIES ONLY TO TRANSFER OF C APITAL ASSET AND DOES NOT APPLY TO STOCK-IN-TRADE. THE PROFITS/GAIN ON LAND HELD AS STOCK- IN-TRADE ACCRUES ONLY WHEN THE SALE DEED IS EXECUT ED U/S 54 OF TRANSFER OF PROPERTY ACT . THE A.O. HAS APPLIED THE PROVISIONS OF PART PERFORM ANCE U/S 53A OF TRANSFER OF PROPERTY ACT, 1882 TO LAND HELD BY THE ASSESSEE AS STOCK-IN- TRADE. THIS IS TOTALLY ILLEGAL & OPPOSED TO THE DE FINITION OF TRANSFER U/S 2(47)(V) OF THE INCOME TAX ACT, 1961. YOUR HONOUR WILL KINDLY APPRECIATE THAT LEARNED A.O . HAS MADE THE ADDITION ON THE BASIS OF WRONG FACTS, WRONG APPRECI ATION OF LAW AND WRONG LEGAL CASES AS EXPLAINED ABOVE. THE CORRECT LEGAL POSITION IS THAT THE ASSESSEE NEI THER EXECUTED ANY SALE DEED WITH REGARD TO HIS LAND NOR EXECUTED ANY POWER OF ATTORNEY IN FAVOUR OF DEVELOPER I.E. OMAXE LTD. IN RESPECT OF THE DEVELOPED LAND FOR FURTHER TRANSFER TO DEVELOPED LAND. IN ABSENCE OF TRANSFER OF ANY RIGHT IN LAND BY THE ASSESSEE, NO PROFIT ACCRUED TO THE ASSESSEE AND NO INCOME WAS EARNED BY THE ASSESSEE. IT IS FURTHER SUBMITTED THAT A.O. HAS GROSSLY ERRED IN DISTURBING THE TRADING RESULTS OF THE ASSESSEE WITHOUT APPLYING TH E PROVISIONS OF SEC. 145(3) OF THE INCOME TAX ACT, 1961. THE A.O. HAS NO T BROUGHT ANYTHING ON RECORD TO SHOW THAT THE ASSESSEE HAD TRANSFERRED ITS RIGHT IN LAND TO PROSPECTIVE BUYERS. 24 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 ON THE OTHER HAND, THE ASSESSEE HAS LEAD EVIDENCE T O SHOW THAT THERE HAS BEEN NO TRANSFER OF ANY RIGHT IN LAND TO OMAXE LTD. OR THE PROSPECTIVE BUYER. IN VIEW OF THE FACTS NARRATED ABOVE AND CASE LAWS R ELIED UPON, IT IS SUBMITTED THAT A.O. HAS GROSSLY ERRED IN MAKING THE ADDITIONS BY RELYING OR WRONG FACTS & WRONG CASE LAWS & WRONG APPRECIATI ON OF LEGAL POSITION. THE LEARNED A.O. HAS CONVENIENTLY IGNORED THE APEX COURT DECISIONS RELIED UPON BY THE ASSESSEE WITHOUT SAYIN G A SINGLE WORD ABOUT THE SAME. IT IS FURTHER SUBMITTED THAT WORTHY CIT(A) HAS SIMP LY REPRODUCED THE OBSERVATIONS OF THE A.O. HE HAS REJECTED THE APEX C OURT DECISION QUOTED BY THE ASSESSEE WITH THE REMARKS THAT FACTS OF THES E CASES ARE DIFFERENT FROM THE FACTS OF THE ASSESSEES CASE. THE OTHER DE CISIONS RELIED UPON HAVE NOT BEEN EVEN DISCUSSED. THE OBSERVATION OF WORTHY CIT(A) THAT ASSESSEE HAD RECEIVED 95% OF THE PAYMENT AFTER HANDING OVER THE POSSESSION OF LAND IN OPPOSED TO THE FACTS. THE POSSESSION HAS STILL NOT BEEN HANDED OVE R AND SALE DEED HAS NOT YET BEEN EXECUTED. SIMPLY BECAUSE ASSESSEE HAS RECEIVED 95% OF THE VALUE AS ADVANCE DOES NOT MEAN THAT AN ADVANCE SHAL L PARTAKE THE CHARACTER OF RECEIPT. THE FINDS OF WORTHY CIT(A) AR E OPPOSED TO THE FACTS ON RECORD. YOUR HONOUR ARE THEREFORE REQUESTED TO KINDLY DELET E THE ENTIRE ADDITION OF RS. 10,56,80,528/- MADE BY THE A.O. & OBLIGE. THANKING YOU, YOURS FAITHFULLY, SD/./- (CHARTERED ACCOUNTANTS) 25 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 9) LEARNED DR CONTROVERTED THE ARGUMENTS ADVANCED B Y THE LEARNED COUNSEL FOR THE ASSESSEE IN THE WRITTEN SUB MISSION AND RELIED UPON THE IMPUGNED ORDER PASSED BY LEARNED FIRST APPELLAT E AUTHORITY. HE STATED THAT THE DEPARTMENT HAS ALSO FILED A PAPER B OOK CONTAINING PAGES 1 TO 176 IN WHICH HE HAS ATTACHED VARIOUS DOCUMENTARY EVIDENCES AND HE REQUESTED THAT THE SAME MAY BE CONSIDERED AT THE TI ME OF DECISION. ESPECIALLY, HE DREW OUR ATTENTION TOWARDS PAGES NO. 42 TO 78 OF THE DEPARTMENT PAPER BOOK, WHICH INCLUDES SECOND ADDEND UM TO COLLABORATION AGREEMENT DATED 9 TH JULY, 2007; THIRD ADDENDUM TO COLLABORATION AGREEMENT DATED 1 ST DECEMBER, 2007; FOURTH ADDENDUM TO COLLABORATION AGREEMENT DATED 30 TH APRIL, 2009 MADE BY THE ASSESSEE AND M/S OMAXE LTD; AND ADDITIONAL COPY OF AGREEMENT TO SELL. HE MAINLY EMPHASIZE THAT THE ASSESSEE COMPLETED SALES AND TRANSFERRED PROPERTY IN DISPUTE TO THE DEVELOPERS SO AS TO ENAB LE THE DEVELOPERS TO BUILD MM PROJECT. THE MAIN OBLIGATION ON THE PART O F THE ASSESSEE, AS PER THE AGREEMENT, IS TO HAND OVER THE POSSESSION OF LA ND HELD BY THEM AS STOCK IN TRADE AND FIXED RATIO I.E. 27% AND 73% RE SPECTIVELY IN THE BUILT UP AREA OF MM PROJECT. AS A RESULT OF THIS BUSINES S DEAL, THE APPELLANT IS TO RECEIVE AMOUNT IN CONSIDERATION OF SALE AREA OF SHOPS, SHOWROOMS AND 26 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 OTHER COMMERCIAL SPACES, FALLING TO THEIR 27% SHARE FROM THE PROSPECTIVE BUYERS. HE FURTHER STATED THAT THE ASSESSEE HAS ALS O FILED ITS REPLY ALONG WITH COPY OF ADDITIONAL AGREEMENT EXECUTED ON 01.08 .2008 BY M/S OMAXE LTD (DEVELOPER) AND M/S HERITAGE PROJECTS (OW NER) IN THEIR CAPACITY AS SELLERS AND M/S AGER HOTELS INDIA PRIVA TE LTD AS PURCHASERS. LEARNED DR FURTHER STATED THAT IT IS VERY MUCH CLEA R THAT 95% OF AGREED SALE CONSIDERATION OF RS. 46,09,92,000/-, WHICH AMO UNTS TO RS. 43,79,42,400/- WAS RECEIVED DURING THE YEAR ENDING 31.03.2009, OUT OF WHICH 27% SHARE OF THE APPELLANT IS RS. 11,82,44,44 8/-, AND AS AGAINST THIS THE ASSESSEE RECEIVED RS. 11,45,10,338/- AS TH EIR SHARE FROM THE DEVELOPERS, WHICH HAS RIGHTLY BEEN TAXED BY THE ASS ESSING OFFICER AND THE LEARNED FIRST APPELLATE AUTHORITY HAS UPHELD TH E ORDER OF THE ASSESSING OFFICER. HE FURTHER REQUESTED THAT THE AS SESSEE HAS RECEIVED THIS AMOUNT CONSEQUENT TO HANDING OVER OF POSSESSIO N OF THEIR LAND TO THE DEVELOPER AND ONLY 5% OF SALE CONSIDERATION IS LEFT TO BE RECEIVED AFTER COMPLETION OF TECHNICAL FORMALITIES BEFORE EXECUTIO N OF SALE DEED. KEEPING IN VIEW FACTS AND CIRCUMSTANCES EXPLAINED A BOVE, THE ASSESSEE IS LIABLE TO PAY TAX ON SUCH REVENUE RECEIPT EARNED AN D ACTUALLY RECEIVED IN RESPECT OF THEIR 27% SHARE. THEREFORE, HE REQUESTED THAT THE ORDER PASSED 27 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 BY LEARNED CIT(A), AMRITSAR, MAY BE UPHELD AND THE APPEAL FILED BY THE ASSESSEE MAY BE DISMISSED. 10) WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE LEVANT RECORD AVAILABLE WITH US, ESPECIALLY THE IMPUGNED ORDER PA SSED BY THE LEARNED FIRST APPELLATE AUTHORITY ALONG WITH THE PAPER BOOK S FILED BY THE PARTIES. AS PER RECORD, THE ASSESSEE-FIRM WAS ESTABLISHED IN APRIL, 2005 BY THE PARTNERSHIP DEED TO CARRY OUT THE BUSINESS REAL EST ATE, PROPERTIES, COLONIZERS & DEVELOPERS. ASSESSEE FILED ITS RETURN OF INCOME DECLARING LOSS OF RS. 2,84,909/-. THE LAND OWNED BY THE ASSES SEE-FIRM HAS BEEN SHOWN IN THE STOCK IN TRADE FOR THE FINANCIAL YEAR 2005-06. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH LIST OF ADVAN CES AS WELL AS LIST OF CREDITORS ALONG WITH THEIR COPIES OF ACCOUNT AS APP EARING IN THE BALANCE SHEET. THE ASSESSEE PROVIDED LIST OF CREDITORS AS W ELL AS LIST OF ADVANCES/DEBTORS, WHICH ARE AS UNDER: DURING THE YEAR, THE ASSESSEE HAS RECEIVED AMOUNTS FROM THE FOLLOWING PERSONS: NAME AMOUNT(RS.) HARPREET SINGH 22,09,250/- DAVINDER PAL SINGH 22,09,250/- DSK REALTORS PVT. LTD. 1,90,00,000/- HERITAGE FIN. LEASE PVT. LTD. 80,00,000/- OMAXE CONSTRUCTION 11,45,10,338/- SATPAL MAHAJAN 32,09,250/- VANDANA AHUJA & SEEMA AHUJA 30,00,000/- 28 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 FURTHER, THE ASSESSEE HAD MADE PAYMENTS TO THE FOLL OWING PERSONS:- NAME AMOUNT (RS.) SPLENDOR LANDBASE LTD. DELHI 5,80,00,000/- SANJAY GUPTA & KANU MISHRA 16,83,000/- VANDANA AHUJA & SEEMA AHUJA 3,70,102/- 11) AFTER PERUSING THE LEDGER ACCOUNT, AS STATED ABO VE, ASSESSING OFFICER WAS OF THE VIEW THAT THE SUBSTANT IAL RECEIPTS FROM M/S OMAXE TERMINAL AND PAYMENT OF RS. 5.8 CRORES TO SPL ENDOR LANDBASE LTD. BESIDE OTHERS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FILE ITS EXPLANATION REGARDING NATURE OF PAYMENT RECEIVED FR OM M/S OMAXE TERMINAL AS WELL AS PAYMENT MADE TO THE PERSONS, AS MENTIONED ABOVE. IN REPLY, THE ASSESSEE SUBMITTED THAT THEY ENTERED INT O A COLLABORATION AGREEMENT WITH M/S OMAXE CONSTRUCTION LTD. WHO ARE THE REAL ESTATE DEVELOPERS VIDE COLLABORATION AGREEMENT DATED 21.01 .2006, TO CONSTRUCT A MALL-CUM-MULTIPLEX AND A HOTEL COMPLEX IN AN AREA O F 3 ACRES (14,520/- SQ. YARD AND TO KEEP THE BALANCE AREA OF 1.29 ACRES FOR FUTURE DEVELOPMENT). AS REGARDS TO THE PAYMENT MADE TO SPL ENDOR LANDBASE, IT WAS EXPLAINED THAT IN EARLIER YEARS THEY HAD ENTERE D INTO COLLABORATION WITH THE SAID COMPANY TO ACQUIRE LAND FOR DEVELOPME NT AS COLONIZERS, WHICH PROJECT COULD NOT BE SUCCESSFUL. SO THEY HAD REFUNDED THEM THEIR 29 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 OUTSTANDING AMOUNT AFTER GETTING FUNDS FROM OMAXE. BY THE COLLABORATION AGREEMENT ENTERED INTO WITH OMAXE CON STRUCTION LTD., BOTH THE PARTIES AGREED TO MAKE TWO ARRANGEMENTS ONE TO DEVELOP & CONSTRUCT THE MALL-CUM-MULTIPLEXES AS ONE PART OF THE SAID CO MMERCIAL COMPLEX ON COLLABORATION BASIS AND OTHER FOR DEVELOPMENT CONST RUCTION AND MANAGEMENT OF THE HOTEL PROJECT AS THE OTHER PART O F THE COMMERCIAL COMPLEX. FURTHER, THE DEVELOPERS HAD ALSO AGREED TO OBTAIN ALL THE PERMISSIONS, APPROVALS AND SANCTIONS IN THEIR OWN N AME FOR THE PURPOSE OF DEVELOPING AND CONSTRUCTING THE SAID COMMERCIAL COMPLEX ON SAME TERMS AND CONDITIONS, WHICH THE ASSESSING OFFICER H AS MENTIONED IN THE IMPUGNED ORDER. FOR THE SAKE OF CONVENIENCE, THE IM PORTANT TERMS AND CONDITIONS ARE REPRODUCED AS UNDER: 1. THE AREA OF CONSTRUCTION FOR MALL-CUM-MULTIPLEX WAS FIXED AT 2,25,000 SQ. FEET OUT OF THE TOTAL AREA OF 3,50,000 /- SQ. FEET OF THE ENTIRE COMMERCIAL COMPLEX. THE BALANCE ARE OF 1 ,25,000/- SQ. FEET WAS TO BE USED FOR CONSTRUCTING A HOTEL PR OJECT. THE DEVELOPERS IS TO FINALIZE THE BUILDING PLAN OF THE ENTIRE COMMERCIAL COMPLEX AND IS RESPONSIBLE FOR DEVELOPME NT, CONSTRUCTION AND COMPLETION OF THE MALL-CUM-MULTIPL EX PROJECT. COST OF EXPENSES FOR WHICH WAS ESTIMATED @ 1600 PER SQ. FEET. THE ASSESSEE AND THE DEVELOPERS IS TO SHARE THE BUI LT UP ARE OF THE MALL CUM MULTIPLEX PROJECT (HEREIN AFTER REFERR ED TO AS MM PROJECT). 2. THE DEVELOPER PAID A SUM OF RS. 51 LACS AS SECUR ITY TO THE ASSESSEE WHICH WAS TO BE ADJUSTED AGAINST AREA OF T HE ASSESSEE (27%). 30 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 3. ASSESSEE AS WELL AS THE DEVELOPERS ALSO DECIDED THE SHARE THE BUILT UP AREA, CAR PARKING SPACES, SIGN AGE SPACES OF MM PROJECT WITH THE RATIO OF 27% AND 73% RESPECTIVELY. 4. THE MM PROJECT WITH BE LAUNCHED FOR SALE IN NAME OF DEVELOPERS. 5. THE DEVELOPERS IS TO COMPLETE DEVELOPMENT AND CO NSTRUCTION WITHIN A PERIOD OF 36 MONTHS FROM THE DATE OF SANCT ION OF BUILDING. 6. THIS AGREEMENT BETWEEN THE PARTIES WAS NOT TO BE REVOKED OR CANCELLED AND SHALL BE BINDING ON BOTH THE PARTIES AND THEIR SUCCESSORS ETC. 12) AFTER PERUSING THE AFORESAID TERMS AND CONDITIONS OF THE AGREEMENT AS WELL AS THE REPLY FILED BY THE ASSESSE E, THE ASSESSING OFFICER IS OF THE VIEW THAT THE ASSESSEE HAS DEALT WITH THEIR STOCK IN TRADE HOLDING IN A WAY TO EXPLOIT THEIR STOCK IN TRADE AS ADVENTURE IN NATURE OF TRADE. HE FURTHER HELD THE ASSESSEE HAS ALSO HANDED OVER POSSESSING OF THEIR LAND TO DEVELOPERS FOR THE PURPOSE OF CONSTRU CTION OF MULTIPLEX ON WHICH THE DEVELOPERS ALSO PUT A BOARD OF OMAXE HERI TAGE AT THE SITE INDICATING UPCOMING OF MM PROJECT. AS PER RECORD, T HE LAND IN QUESTION IS SITUATED ON MOST PRESTIGIOUS ROAD WHICH LEADS TO THE INTERNATIONAL AIRPORT AND THE PROJECT OF CONSTRUCTION OF MM PROJE CT HAS BEEN UNDERTAKEN BY THE ASSESSEE ON COMMERCIAL POINT OF V IEW. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED SUBSTANT IAL AMOUNT OF RS. 11,45,10,338/- FROM DEVELOPER AGAINST THEIR STOCK I N TRADE BY VIRTUE OF IRREVOCABLE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE DEVELOPER. 31 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 THE DEVELOPER HAS ACQUIRED RIGHT IN THE SUPER AREA TO BUILD ON LAND HOLDING OF THE ASSESSEE TO THE EXTENT OF 73%. 13) AS PER DETAILS FURNISHED BY THE ASSESSEE, THE DEV ELOPER HAVE COLLECTED ADVANCE FROM CUSTOMERS AMOUNTING TO RS. 5 2.06 CRORES AND HAS MADE NET PAYMENT OF RS. 12,43,51,365/- TO THE ASSES SEE OUT OF WHICH RS. 11,45,10,338/- HAS BEEN PAID BY THE DEVELOPER TO TH E ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE DETAILS OF THE MONEY RECEIVED FROM THE CUSTOMERS AND PAID TO THE ASSESSEE, THE ASSESSING O FFICER HAS MENTIONED AT PAGE 4 IN THE ASSESSMENT ORDER, WHICH IS REPRODU CED AS UNDER: UPTO 31.11.2011 AMOUNT ADVANCE RECEIVED FROM CUSTOMERS 520,603,911.37 SECURITY RECEIVED FROM CUSTOMERS 2,497,240.00 523,101,151.37 LESS: MARKETING SHARE 18,939,293.18 504,161,858.2 SHARE OF OMAXE 73.00% 368,038,156.48 SHARE OF HERITAGE PROJECTS 27.00% 136,123,701.71 504,161,858.19 TOTAL SHARE OF HERITAGE PROJECTS 136,123,701.71 LESS: ALREADY PAID 124,351,365.50 BALANCE TO BE PAYABLE 11,772,336.21 ASSURED RETURN DEBIT** 24,655,844.6 NET BALANCE TO BE PAYABLE/RECEIVABLE -12,883,508 .39 32 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 14) KEEPING IN VIEW THE AFORESAID DISCUSSION, THE AS SESSING OFFICER IS OF THE VIEW THAT WHAT THE ASSESSEE HAS R ECEIVED FROM THE DEVELOPERS, IS THE SURPLUS GENERATED BY THE ASSESSE E ON SALE OF THEIR STOCK IN TRADE BY VIRTUE OF ABOVE IRREVOCABLE COLLABORATI ON AGREEMENT AND THEREFORE THE SURPLUS SO RECEIVED DURING THE YEAR S HALL BE CHARGEABLE TO TAX AS BUSINESS INCOME. AS PER THE ACCOUNTING STAND ARD FOR THE PERSONS, WHO CARRY ON CONSTRUCTION BUSINESS, THE PROFITS DER IVED FROM STOCK IN TRADE IS COMPUTED UNDER THE HEAD PROFIT & GAINS OF BUSINESS OR PROFESSION. 15) AFTER CONSIDERING THE WRITTEN SUBMISSION AS WELL AS DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE, THE ASSESSING OFFICER HAS HELD THAT THE LAND IN DISPUTE HAS BEEN HANDED O VER BY THE ASSESSEE TO THE DEVELOPER FOR CONSTRUCTION OF MM PROJECT IN THE NAME OF DEVELOPERS COMPANY VIZ. OMAXE, THE DEVELOPER HAD PAID AMOUNT OF RS. 11,45,10,338/- TO THE ASSESSEE DURING THE F.Y. 2008 -09 AND THIS RECEIPT IN THE HANDS OF ASSESSEE IS SURPLUS OF THEIR STOCK IN TRADE AND ACCORDINGLY THE SAME IS TAXABLE DURING THE YEAR. AT LAST, HE COMPLE TED THE ASSESSMENT ON 23.12.2011 AND ASSESSED THE AMOUNT OF RS. 11,45,10, 338/- AS TRADING RECEIPT, AND NET PROFIT OF RS. 10,53,95,619/- AFTER ALLOWING THE EXPENDITURE ETC., UNDER THE HEAD PROFIT OF THE BUS INESS AND PROFESSION. 33 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 16) WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS PASSED A VERY DETAILED ORDER AFTER DISCUSSING EACH AND EVERY ISSU E RAISED BY THE ASSESSEE. WE HAVE THOROUGHLY GONE THROUGH THE ASSES SMENT ORDER AND THE IMPUGNED ORDER AS WELL AS THE WRITTEN SUBMISSION FI LED BY THE ASSESSEE ALONG WITH PAPER BOOK FILED BY THE DEPARTMENT. WE A RE OF THE CONSIDERED VIEW THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS THOROUGHLY CONSIDERED THE WRITTEN SUBMISSION AND REMAND REPORT OF THE ASS ESSING OFFICER ON THE ISSUE IN DISPUTE AND HAS TAKEN CARE OF EACH AND EVE RY ARGUMENTS ADVANCED BY THE ASSESSEE IN THE IMPUGNED ORDER. THE ASSESSEE HAS CHALLENGED THE ADDITION IN DISPUTED BEFORE THE LEARNED FIRST APPEL LATE AUTHORITY MAINLY ON THE GROUND THAT THE POSSESSION OF THE LAND IN DI SPUTE HAS BEEN GIVEN TO THE DEVELOPER AT THE TIME OF EXECUTION OF COLLABORA TION AGREEMENT IN ORDER TO FELICITATE THE CONSTRUCTION WORK FOR THE COMMERC IAL COMPLEX. THE ASSESSEE RETAINED THE RIGHT TO SELL THE PROPERTY AN D THE DEVELOPER WAS GIVEN NO POWERS TO SELL THE PROPERTY. DEVELOPER WAS ONLY AUTHORIZED TO RECEIVE BOOKING AMOUNTS WHILE THE RIGHT TO SELL THE PROPERTY WAS RETAINED BY THE ASSESSEE FIRM. THE ENTIRE PROJECT IS STILL N OT COMPLETED AND IS AWAITING DUE TO MANY FORMALITIES WHICH ARE YET TO B E COMPLETED BY THE DEVELOPER. HE ALSO STATED THAT THE ADVANCE RECEIVED BY THE DEVELOPER CANNOT BE TREATED AS INCOME OF THE ASSESSEE, AS I NCOME IS REALIZED ONLY 34 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 A SALE OF THE PROPERTY. ACCORDING TO SECTION 54 OF THE TRANSFER OF PROPERTY ACT, 1882, THE TRANSFER WILL BECOME COMPLE TE ONLY BY REGISTERED INSTRUMENT. AS THE ASSESSEE HAS BEEN DEALING IN IMM OVABLE PROPERTY, THE DEFINITION OF SECTION 54 OF THE TRANSFER OF PROPERT Y ACT, 1882, WILL APPLY TO THE CASE OF THE ASSESSEE. THE EXTENDED DEFINITIO N OF TRANSFER GIVEN UNDER SECTION 2(47)(V) OF THE ACT IS ALSO NOT APPLI CABLE TO THE CASE OF THE ASSESSEE AS IT IS APPLICABLE ONLY IN CASE OF TRANSF ER OF CAPITAL ASSET. BUT IN THE CASE OF ASSESSEE NO SALE HAS BEEN TAKEN PLACE W ITH REGARD TO THE LAND/BUILDING OF THE ASSESSEE/DEVELOPER DURING THE YEAR WITHIN THE MEANING OF SECTION 54 OF THE TRANSFER OF PROPERTY A CT, AS SUCH NO PROFIT COULD ACCRUE TO THE ASSESSEE. IN SUPPORT OF HIS CON TENTION, LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE VARIOUS DECISIONS RENDERED BY HON'BLE SUPREME COURT, HON'BLE HIGH COURTS AND I.T.A.T. BEN CHES, WHICH HE HAS MENTIONED IN HIS WRITTEN SUBMISSION BUT AFTER GOING THROUGH ALL THESE DECISIONS CITED BY LEARNED COUNSEL FOR THE ASSESSEE , WE ARE OF THE CONSIDERED VIEW THAT THESE DECISIONS ARE NOT HELPFU L TO THE ASSESSEES CASE AND THE FACTS OF THE CASES CITED ARE TOTALLY DIFFER ENT FROM THE FACTS OF THE PRESENT CASE. WE HAVE THOROUGHLY GONE THROUGH THE W RITTEN SUBMISSION FILED BY LEARNED COUNSEL FOR THE ASSESSEE, WHICH IS REPRODUCED ABOVE IN PARA NO. 4. WE ARE OF THE CONSIDERED OPINION THAT L EARNED COUNSEL FOR THE 35 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 ASSESSEE WHO APPEARED BEFORE US HAS ALSO APPEARED B EFORE THE LEARNED FIRST APPELLATE AUTHORITY AND FILED ALL MOST SIMILA R WRITTEN SUBMISSION BEFORE THE LEARNED FIRST APPELLATE AUTHORITY AND TH E LEARNED FIRST APPELLATE AUTHORITY HAS DISCUSSED IN DETAIL EACH AN D EVERY ARGUMENT ADVANCED BY HIM. FOR THE SAKE OF CONVENIENCE, THE F INDINGS GIVEN BY THE LEARNED FIRST APPELLATE AUTHORITY IN PARA 7 TO 13 ( PAGES 25 TO 30) OF THE IMPUGNED ORDER, ARE REPRODUCED AS UNDER:- 7. I HAVE CAREFULLY CONSIDERED THE APPELLANTS WRI TTEN SUBMISSIONS, REBUTTAL TO THE A.O.S REMAND REPORT AND HAVE GONE THROUGH THE A.O.S FINDINGS CONTAINED IN THE A.O.S ASSESSMENT ORDER IN QUESTION AS WELL AS THE COMMENTS OF THE PRESENT A.O. AS CONT AINED IN HIS REMAND REPORT (SUPRA). I HAVE GONE THROUGH THE FACT S OF THE CASE AND MY FINDINGS IN THIS REGARD ARE AS UNDER:- GROUNDS OF APPEAL TAKEN BY THE APPELLANT RELATED TO CHALLENGE TAXING OF AMOUNT OF RS. 11,45,10,338/- AS INCOME UNDER THE HEAD BUSINESS & PROFESSION BY THE ASSESSEE, OR WITH REGARD TO APPLI CATION OF CASE LAWS ON THE FACTS OF THE CASE. I HAVE CONSIDERED THE WR ITTEN SUBMISSIONS FILED, CASE LAWS CITED BY THE APPELLANT AND THE ASS ESSMENT ORDER PASSED BY THE A.O. THE A.O. HAS ARGUED THAT THE AGREEMENT TO DEVELOP T HE LAND HELD BY THE APPELLANT, BY THE DEVELOPER IS NOT AN IN THE NA TURE OF AGREEMENT FOR SALE. IT IS AN EXECUTOR AGREEMENT, WHEREBY THE DEVELOPER UNDERTAKES TO PUT UP A SUPERSTRUCTURE ON THAT PART OR PORTION OF LAND RETAINED BY THE OWNER IN CONSIDERATION OF TRANSFER OF REMAINING PART. DEVELOPMENT AGREEMENT IS NOT A SALE SIMPLICITIES, B ECAUSE THERE IS AN ELEMENT OF BUILDERS CONTRACT WITH THE ONLY DIFFERE NCE THAT THE CONSIDERATION IS NOT CASH, BUT IN KIND I.E. CONSTRU CTION PORTION ON THE RETAINED LAND. AN AGREEMENT FOR SALE CAN BE ENFORCE D IN A COURT OF LAW BY A DECREE ORDERING SPECIFIC PERFORMANCE WHERE THE OWNER DOES NOT CARRY OUT THE OBLIGATIONS EITHER UNDER THE AGREEMEN T FOR SALE OR THE COURT DECREE. WHEREAS IN DEVELOPMENT AGREEMENT ONE CANNOT EXPECT 36 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 CONSTRUCTION TO BE UNDERTAKEN BY THE DEVELOPER, ONC E A BREACH HAS OCCURRED, SO THAT THERE IS ONLY DAMAGES FOR THE PAR TY, WHO HAS SUFFERED THE BREACH. THERE CANNOT BE SPECIFIC PERFO RMANCE IN THE SENSE ORDINARILY UNDERSTOOD IN ENFORCEMENT OF AGREE MENT FOR SALE. CALCUTTA HIGH COURT HAS RECOGNIZED DEVELOPMENT AGRE EMENT AS A BUSINESS AGREEMENT. [ MADGUL UDYOG V. CIT (1990) 18 4 ITR 484 (CAL) APPROVED IN CIT V. PODAR CEMENTS PVT. LTD. (1 997) 226 ITR 625 (SC)]. THE A.O. THEREFORE ARGUED THAT RECEIPT OF CASH IN A YEAR ON ACCOUNT OF DEVELOPMENT AGREEMENT, IN A PARTICULAR YEAR SHALL B E BUSINESS RECEIPT AND THEREFORE THE SAME SHALL BE TAXABLE. 8. IT IS REITERATED BRIEFLY ONCE AGAIN THE FINDINGS OF A.O. AND IMPORTANT RECITALS OF THE COLLABORATION AGREEMENT I N QUESTION:- THE A.O. HAS RECORDED FINDING THAT THE ASSESSEE HAS RECEIVED SUBSTANTIAL AMOUNT FROM DIFFERENT PERSONS INCLUDING AMOUNT OF RS. 11,45,10,338/- FROM M/S. OMAXE CONSTRUCTION LTD. AN D ASSESSEE HAS APPLIED THESE AMOUNTS FOR MAKING VARIOUS PAYMENTS I N DUE COURSE OF ITS CARRYING OF HIS BUSINESS DURING THE YEAR. IT WA S ALSO STATED THAT THE ASSESSEE ENTERED INTO AN IRREVOCABLE COLLABORATION AGREEMENT WITH M/S OMAXE CONSTRUCTION LTD. FOR CONSTRUCTION OF MAL L CUM MULTIPLEX. THE EXTRACT OF IMPORTANT CLAUSES OF THE COLLABORATI ON AGREEMENT ARE REPRODUCED AS UNDER:- CLAUSE 2 THAT THE FIRST PARTY HAS HANDED OVER THE POSSESSION OF THE SAME LAND TO THE SECOND PARTY FOR TABLE SURVEY, LEV ELING AND TO DO ALL TECHNICAL FEASIBILITY OF THE SAID COMMERCIAL COMPLE X ON THE SAID LAND FOR PREPARING PLANS, DESIGNS ETC. ON SIGNING OF THE AGREEMENT. CLAUSE 5 THE AREA FIXED FOR THE MALL CUM MULTIPLEX WAS 2,25,000/- SQ. FEET OUT OF TOTAL AREA OF 3,50,000/- SQ. FEET O F THE ENTIRE COMMERCIAL COMPLEX. THE BALANCE AREA OF 1,25,000 SQ. FEET WAS TO BE USED FOR CONSTRUCTING A HOTEL PROJECT. AS PER CLAUSE 5 OF TH E SAID AGREEMENT, THE OMAXE(DEVELOPER) WILL BEAR THE ENTIRE COST OF D EVELOPMENT AND CONSTRUCTION OF THE MALL CUM MULTIPLEX TO BE BUILT COVERING THE FSI OF APPROX. 2,25,000/- SQ. FEET, BOTH THE PARTIES HAVE DECIDED TO SHARE THE 37 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 BUILT UP AREA, SIGNAGE SPACE AND THE CAR PARKING SP ACES SO CONSTRUCTED IN THE MALL CUM MULTIPLEX ON THE SAID M EGA PROJECT LAND AS THE OWNERS OF THE BUILT UP AREA IN THE RATIO OF 27% (HERITAGE) AND 73% (OMAXE CONSTRUCTION LTD.). THE MM PROJECT WILL BE LAUNCHED FOR SALE IN THE NAME OF DEVELOPER. THE DEVELOPER M/S OM AXE CONSTRUCTION LTD. HAS PUT UP A BOARD OF OMAXE HERITAGE AT THE SI TE INDICATING UPCOMING OF MM PROJECT. CLAUSE 13 THE FIRST PARTY (ASSESSEE) SHALL EXECUTE D A REGISTERED POWER OF ATTORNEY IN FAVOUR OF THE SECOND PARTY (DE VELOPER) TO DO ALL NECESSARY THINGS PERTAINING TO CONSTRUCTION/DEVELOP MENT OF THE SAID MALL AREA AND TO BOOK, ENTER INTO AGREEMENT TO SELL FOR ALLOTMENT OF INDIVIDUAL UNITS IN THE SAID MALL AREA AND TO RECEI VE ADVANCES, INSTALLMENTS, DEPOSITS, CHARGES, LEASE MONEY ETC. F ROM THE PROSPECTIVE BUYERS/LESSEE OF THE UNITS IN THE SAID MALL AREA FA LLING TO THE SHARE OF THE SECOND PARTY AND/OR TO ACHIEVE THE OBJECTIVE OF THE COLLABORATION AGREEMENT. THE SAID POWER OF ATTORNEY HAS BEEN GIVE N TO THE SECOND PARTY BY THE FIRST PARTY ON THE SIGNING OF THE AGRE EMENT. CLAUSE 18 THAT BOTH THE PARTIES SHALL IDENTIFY AN D ALLOCATE THEIR SHARE OF THE MALL AREA IMMEDIATE ON SANCTION OF THE ZONING PLAN AND BUILDING PLANS. THE ALLOCATION OF AREAS OF BOTH THE PARTIES SHALL BE CARRIED OUT EQUITABLY OR VERTICALLY ON EACH FLOOR A S PER THEIR SHARING RATIO ENUMERATED IN CLAUSE-5 HEREINABOVE. CLAUSE 21 THAT THE PHYSICAL POSSESSION OF THE SAID LAND SHALL REMAIN UNDER THE SOLE CUSTODY OF THE SECOND PARTY (DEVELOP ER) TILL THE COMPLETION OF THE SAID MALL CUM MULTIPLEX IN THE EN TIRETY AND ALSO THEREAFTER IN THE EVENT OF ANY DISPUTE ARISING WITH ANY PARTY RELATING TO TITLE, POSSESSION AND/OR TENANCIES PERTAINING TO TH E SAID LAND IN QUESTION. WHEN THE SAME WILL BE SETTLED BY THE FIRS T PARTY AT ITS OWNS COSTS, RISK AND RESPONSIBILITIES. CLAUSE 35 THAT THE FIRST PARTY SHALL EXECUTE AND REGISTER THE SALE DEED(S) OR SUCH OTHER DOCUMENTS, OR INSTRUMENT(S) I N FAVOUR OF INTENDING PURCHASER(S) OF UNIT(S), SPACE(S), CAR PA RKING ETC. IN RESPECT OF THE UNIT, SPACE ETC., AGREED TO BE SOLD TO DIFFE RENT INTENDING PURCHASER BY THE SECOND PARTY AT THE COST AND EXPEN SE OF THE SAID INTENDING PURCHASER AND SHALL GIVE THE SAID INTENDI NG PURCHASER TITLE 38 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 AS MAY BE PERMISSIBLE BY PRESENT AND FUTURE LAWS ON THE TERMS AND CONDITIONS OF THIS AGREEMENT. THE SECOND PARTY WILL EXERCISE THIS POWER OF ATTORNEY THROUGH THE REGISTERED POWER OF A TTORNEY IN ITS FAVOUR EXECUTED BY THE FIRST PARTY AFTER HANDING OV ER THE AREA FALLING TO THIS SHARE OF THE FIRST PARTY. 9. THE COLLABORATION AGREEMENT AS STATED ABOVE GIVE POSSESSION TO THE DEVELOPER TO CARRY OUT THE DEVELOPMENT WORK AND ALSO THROUGH REGISTER POWER OF ATTORNEY GIVEN TO THE DEVELOPER O N THE DATE OF SIGNING OF THE AGREEMENT, HE CAN ENTER INTO AGREEME NT TO SELL FOR ALLOTMENT OF INDIVIDUAL UNITS IN THE SAID MALL AREA (CLASUE 13) THOUGH THE SALE DEED BY THE FIRST PARTY WILL BE EXECUTED A ND REGISTERED IN FAVOUR OF INTENDING PURCHASERS AGREED TO BE SOLD BY SECOND PARTY AFTER HANDLING OVER THE AREA FALLING TO SHARE OF THE FIRS T PARTY. THE DEVELOPER IN ACCORDANCE WITH THE TERMS OF COLLA BORATION AGREEMENT WILL BE OWNER OF BUILT UP AREA TO THE EXT ENT OF 73% (CLAUSE 5). THE MM PROJECT BY THE ASSESSEE IS UNDERTAKEN FO RM COMMERCIAL POINT OF VIEW AS THE LAND OF THE APPELLANT HELD BY THEM AS STOCK IN TRADE IS SITUATED ON MOST PRESTIGIOUS ROAD LEADING TO INTERNATIONAL AIRPORT, AMRITSAR. THE VARIOUS JUDGMENTS ARE CONSI DERED TO DETERMINE THE BUSINESS INCOME ON RECEIPT BASIS IN T ERMS OF THE FACTS OF THE CASE UNDER CONSIDERATION. 10. THE HON'BLE SUPREME COURT IN THE CASE OF P.M. M OHAMMED MEERKHAN VS. CIT REPORTED AT 73 ITR 735 (S.C.) HAS TAKEN THE VIEW THAT THE PROFITS OF THE ASSESSEE CAN BE ASCERTAINED EVEN ON THE ASSUMPTION THAT THE TRANSACTION OF THE ADVENTURE OF TRADE WAS NOT COMPLETED. IN THE CASE OF A TRADING ADVENTURE THE P ROFITS HAVE TO BE CALCULATED AND ADJUSTED IN THE LIGHT OF THE PROVISI ONS OF THE INCOME- TAX ACT. IT IS THE DUTY OF A.O. TO FIND OUT WHAT PR OFIT OF THE BUSINESS HAS MADE ACCORDING TO THE TRUE ACCOUNTANCY PRACTICE . AS A NORMAL RULE, THE PROFIT SHOULD BE ASCERTAINED BY VALUING T HE STOCK IN TRADE AT THE BEGINNING AND AT THE END OF THE ACCOUNTING YEAR . THE VIEW EXPRESSED BY THE HON'BLE SUPREME COURT IN THE ABOVE CASE DOES STRENGTHEN THE PROPOSITION THAT THE PROFITS OF THE ASSESSEE CAN BE ASCERTAINED EVEN IF THE TRANSACTION OF ADVENTURE OF TRADE WAS NOT COMPLETED AND ALSO IN THE CASE OF THE ASSESSEE THE TRANSACTION. THE 39 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 CASE IS RELIED UPON BY A.O. CONSIDERING THE TRANSAC TION ENTERED INTO BY THE ASSESSEE IN RESPECT OF THEIR LAND HELD AS ST OCK IN TRADE, WHICH IS IN THE NATURE OF ADVENTURE IN NATURE OF TRADE AND T HEREBY TREATED THE RECEIPT IN THE HANDS OF THE ASSESSEE AS TRADING REC EIPT AND COMPUTED TRADING PROFITS AFTER ADJUSTING STOCK VALUE OF LAND TO THE EXTENT OF ASSESSEES OWN SHARE (27%). 11. THE APPELLANT ASSESSEE HAS RELIED UPON THE CASE OF DHIR & CO. COLONISERS PVT. LTD. VS. CIT IN WHICH SLP FILED BY THE APPELLANT AGAINST THE JUDGMENT OF HON'BLE PUNJAB HIGH COURT R EPORTED AT 288 ITR 561 (P&H), WAS ALLOWED. THE SUPREME COURT HELD THAT ADVANCES RECEIVED FROM CUSTOMERS BY THE COLONIZERS COULD NOT BE TREATED AS INCOME OF THE ASSESSEE AS INCOME DID NOT ACCRUE TO THE ASSESSEE TILL THE DATE OF EXECUTION OF CONVEYANCE D EED. THE FACTS OF THE CASE OF DHIR & CO., ARE ALTOGETHER DIFFERENT AND TH EREFORE THIS CASE LAW OF HON'BLE SUPREME COURT DO NOT APPLY TO THE FA CTS OF THE CASE. IN THIS CASE THE ASSESSEE WHO WAS COLONIZER HAD RECEIV ED ADVANCES FROM THE CUSTOMERS, WHICH WAS TREATED AS INCOME, AND IT WAS HELD THAT SUCH ADVANCES ARE NOT THE INCOME TILL THE DATE OF EXECUT ION OF THE CONVEYANCE DEED. 12. IN THE CASE UNDER CONSIDERATION THE APPELLANT A SSESSEE IS HOLDING A PIECE OF LAND AS THEIR STOCK IN TRADE, AN D THEY HANDED OVER THE POSSESSION OF LAND TO THE DEVELOPER FOR CONSTRU CTING MM PROJECT. IN TERMS OF THE COLLABORATION AGREEMENT THE APPELLA NT ASSESSEE IS TO RETAIN 27% OF THEIR LAND WITH SPECIFIED BUILT UP AR EA TO BE RAISED BY THE DEVELOPER FROM THEIR OWN COST. THE DEVELOPER IN TURN IS TO RECEIVE THEIR SHARE OF 73% IN LAND BELONGING AND OWNED BY T HE APPELLANT AND RIGHT TO BUILD MM PROJECT OVER THE SAID LAND. BY VI RTUE OF THIS AGREEMENT, THE APPELLANT ASSESSEE RECEIVED A SUM OF RS. 11,45,10,338/- DURING THE YEAR. NO CONVEYANCE DEED IS TO BE EXECUTED BY THE OWNER IN FAVOUR OF DEVELOPER. IN ADDITION TO ABOVE THE APPELLANT IS TO RECEIVE AMOUNT ON ACCOUNT OF SALE O F SHOPS, SHOWROOMS, AND COMMERCIAL SPACE FALLING TO THEIR SH ARE FROM PROSPECTIVE BUYERS, IN THE SUBSEQUENT YEARS AS WELL , AS AND WHEN THE MM PROJECT OVER THEIR LAND HELD AS STOCK IN TRADE I S BUILT BY THE DEVELOPER. THE TOTAL COST OF THE MM PROJECT IS TO B E BORNE BY THE DEVELOPER ONLY. 40 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 THE MAIN OBLIGATION ON THE PART OF THE APPELLANT, A S PER THE AGREEMENT, IS TO HAND OVER THE POSSESSION OF LAND H ELD BY THEM AS STOCK IN TRADE TO THE DEVELOPER SO AS TO ENABLE THE DEVELOPER TO BUILD THE MM PROJECT. BOTH THE APPELLANT, AS OWNER OF LAN D, AND DEVELOPER, IN THEIR CAPACITY AND SPECIALIZATION TO BUILD MM PR OJECT AGREED TO SHARE A FIXED RATIO I.E. 27% AND 73% RESPECTIVELY I N THE BUILT UP AREA OF MM PROJECT. AS A RESULT OF THIS BUSINESS DEAL TH E APPELLANT IS TO RECEIVE AMOUNT IN CONSIDERATION OF SALE AREA OF SHO PS, SHOWROOMS AND OTHER COMMERCIAL SPACES, FALLING TO THEIR 27% SHARE FROM THE PROSPECTIVE BUYERS. 13. FURTHER THE APPELLANT ASSESSEE HAS FILED ALONG WITH THEIR REPLY, COPY OF ADDITION AGREEMENT TO SELL EXECUTED ON 01.0 8.2008 BY M/S OMAXE LTD (DEVELOPER) AND M/S HERITAGE PROJECTS (OW NER) IN THEIR CAPACITY AS SELLERS AND M/S AGER HOTELS INDIA PRIVA TE LTD.,(HEREINAFTER REFERRED TO AS AGER) AS PURCHAS ERS. AS PER THIS AGREEMENT IT WAS AGREED TO SELL AREA OF 1,18,203/- @ RS. 3900/- PER SQ. FEET ON ACCOUNT OF SALE OF DESIGNATED HOTEL ARE A IN MM PROJECT BY THE SELLER TO THE PURCHASERS FOR A TOTAL SUM OF RS. 46,09,92,000/-. AS PER TERMS OF THIS AGREEMENT 95% WAS PAID BY THE PU RCHASERS TO THE SELLER DURING THE YEAR. FURTHER, AS PER THE TERMS O F AGREEMENT, PAYMENT OF RS. 75% OF THE CONSIDERATION AMOUNTING T O RS. 34,57,44,000/- BY THE PURCHASERS TO THE SELLERS WIT HIN 30 DAYS OF SIGNING OF THE ABOVE AGREEMENT WAS LINKED WITH EXEC UTION OF POWER OF ATTORNEY WITH INTER ALIA RIGHT OF SALE WITH RESPECT TO THE DESIGNATED HOTEL AREA TO BE GIVEN BY THE SELLERS, AND THE BALA NCE PAYMENT OF 5% OF THE SALE CONSIDERATION WAS LINKED WITH EXECUTION AND THE REGISTRATION OF THE SALE DEED WITH RESPECT TO THE D ESIGNATED HOTEL AREA. SO IT IS CLEAR THAT 95% OF THE AGREED SALE CO NSIDERATION OF RS. 46,09,92,000/-, WHICH AMOUNT TO RS. 43,79,42,400/-, WAS RECEIVED DURING THE YEAR ENDING 31.03.2009, OUT OF WHICH 27% SHARE OF THE APPELLANT IS RS. 11,82,44,448/-, AND AS AGAINST THI S THE APPELLANT ASSESSEE RECEIVED RS. 11,45,10,338/- AS THEIR SHARE FROM THE DEVELOPERS, WHICH HAS BEEN TAXED BY THE A.O. THE RE CEIPT OF 95% OF SALE CONSIDERATION ON ACCOUNT OF THEIR 27% SHARE IN LAND AND SUPER AREA OF MM PROJECT SHARE IS NOTHING BUT THE REVENUE RECEIPT EARNED BY THE APPELLANT. NEEDLESS TO MENTION AGAIN THAT TH E APPELLANT ASSESSEE HAS RECEIVED THIS AMOUNT CONSEQUENT TO HAN DING OVER THE POSSESSION OF THEIR LAND TO THE DEVELOPER AND THEIR AGREEING TO RETAIN 41 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 27% OF SHARE OF LAND WITH BUILT UP SUPER AREA THERE ON, AND THE SUPER AREA OVER THE LAND IS TO BE BUILT UP BY THE DEVELOP ER FROM THEIR OWN RESOURCES. ONLY 5% OF SALE CONSIDERATION IS LEFT TO BE RECEIVED AFTER COMPLETION OF TECHNICAL FORMALITIES BEFORE EXECUTIO N OF SALE DEED. IN SUCH AN EVENTUALITY, THE APPELLANT IS LIABLE TO PAY TAX ON SUCH REVENUE RECEIPT EARNED AND ACTUALLY RECEIVED IN RESPECT OF THEIR 27% SHARE. IT IS ALSO RELEVANT TO NOTE THAT THIS AMOUNT WAS RECEI VED BY THE APPELLANT DURING THE YEAR ENDING 31.03.2009 WHEREAS NOW EVEN AFTER PASSING OF CONSIDERABLE TIME THE APPELLANT HAS ENJOYED THE BEN EFIT OF THIS AMOUNT WITHOUT ANY HINDRANCE AND EVEN IN THE NEAR FUTURE T HERE SEEMS TO BE NO LIKELIHOOD OF REFUND OF THIS AMOUNT. IT IS UNDIS PUTED FACT THAT THERE IS TIME VALUE OF MONEY. FOR ALL THESE YEARS THE APP ELLANT HAS ENJOYED THE FRUIT OF THIS MONEY WHICH IS REVENUE RECEIPT, A ND THEY ARE LIABLE TO PAY TAX ON IT. IT WILL BE TRAVESTY OF LAW THAT IF I N SUCH CASES OF CLEAR CUT REVENUE RECEIPT, APPELLANTS PLEA FOR IT BEING EXEM PT FROM TAX IS ENTERTAINED AND ALLOWED. THE A.O. HAS, THEREFORE, R IGHTLY ASSESSED THE AMOUNT OF RS. 11,45,10,338/- AS TRADING RECEIPT, AN D NET PROFIT OF RS. 10,53,95,619/ - AFTER ALLOWING THE EXPENDITURE ETC. , UNDER THE HEAD PROFIT OF THE BUSINESS AND PROFESSION. I, THEREFO RE, DISMISS THE APPEAL FILED BY THE APPELLANT AND UPHELD THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3) OF THE I.T. ACT, 1961. 17) AFTER THOROUGHLY GOING THROUGH THE IMPUGNED ORDER ALONG WITH THE WRITTEN SUBMISSION FILED BY THE ASSESSEE AND TH E ARGUMENTS ADVANCED BY THE LEARNED DR, WHO HAS ALSO FILED A PAPER BOOK CONTAINING PAGES FROM 1 TO 176 IN WHICH HE HAS ATTACHED VARIOUS DOCU MENTARY EVIDENCES SUPPORTING THE ORDER OF REVENUE AUTHORITY. WE ARE O F THE CONSIDERED VIEW THAT THE ASSESSEE HAS RECEIVED HUGE AMOUNT FRO M DIFFERENT PERSONS INCLUDING M/S OMAXE CONSTRUCTION LTD. AND THE ASSES SEE HAS ALSO USED THESE AMOUNTS IN ITS BUSINESS DURING THE YEAR UNDER CONSIDERATION. IT IS A MATTER OF RECORD THAT THE ASSESSEE HAS ENTERED INTO AN IRREVOCABLE 42 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 COLLABORATION AGREEMENT WITH M/S OMAXE CONSTRUCTION LTD. FOR THE CONSTRUCTION OF MALL CUM COMPLEX AND HAS HANDED OVE R THE POSSESSION OF THE SAID LAND TO THE SECOND PARTY FOR TABLE SURV EY, LEVELING AND TO DO ALL TECHNICAL FEASIBILITY OF THE SAID COMMERCIAL COMPLE X ON THE SAID LAND FOR PREPARING PLANS, DESIGNS ETC. ON SIGNING OF THIS AG REEMENT . ALL IMPORTANT CLAUSES OF THE COLLABORATION AGREEMENT HAVE BEEN ME NTIONED BY THE LEARNED FIRST APPELLATE AUTHORITY IN THE IMPUGNED O RDER WHICH ARE REPRODUCED ABOVE IN PARA 16. 18) KEEPING IN VIEW THE CLAUSES OF THE COLLABORATION AGREEMENT, WE ARE OF THE VIEW THAT DEVELOPER HAS BECOME THE OWNER OF THE BUILT-UP AREA TO THE EXTENT OF 73% AND THIS PROJECT BY THE ASSESS EE IS UNDER TAKEN FOR COMMERCIAL POINT OF VIEW AS THE LAND HELD BY THE AS SESSEE AS STOCK-IN- TRADE. IN TERMS OF THE COLLABORATION AGREEMENT, THE ASSESSEE IS TO RETAIN 27% OF THE LAND WITH SPECIFIED BUILT-UP AREA TO BE RAISED BY THE DEVELOPER FROM THEIR OWN COST AND THE DEVELOPER IN TURN IS TO RECEIVE THEIR SHARE OF 73% IN LAND BELONGING AND OWNED BY THE ASSESSEE AND RIGHT TO BUILD MM PROJECT OVER THE SAID LAND. IN LIEU OF THE SAME, TH E ASSESSEE HAS RECEIVED A SUM OF RS. 11,45,10,338/- DURING THE YEAR UNDER CON SIDERATION AND IN ADDITION TO ABOVE, THE ASSESSEE IS TO RECEIVE THE A MOUNT ON AMOUNT OF SALE OF SHOPS, SHOWROOMS AND COMMERCIAL SPACE FALLING TO THEIR SHARE FROM 43 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 THE PROSPECTIVE BUYERS IN THE SUBSEQUENT YEARS AS W ELL AND WHEN MM PROJECT OVER THEIR LAND HELD IN STOCK IN TRADE IS B UILT BY DEVELOPER. THE TOTAL COST OF THIS PROJECT IS TO BE BORNE BY THE DE VELOPER ONLY. 19) IN VIEW OF THE AFORESAID DISCUSSIONS, WE ARE OF T HE CONSIDERED VIEW THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS PASSED A WELL REASONED ORDER AFTER THOROUGHLY GOING THROUGH THE W RITTEN SUBMISSION FILED BY THE ASSESSEE BEFORE HIM ALONG WITH THE VAR IOUS CASE LAWS AND ALL OTHER DOCUMENTARY EVIDENCES FILED BY BOTH THE PARTI ES. LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY UPHELD THE ORDER PA SSED BY THE ASSESSING OFFICER BY HOLDING THAT THE POSSESSION OF THE LAND IN DISPUTE HAS BEEN HANDED OVER BY THE ASSESSEE TO THE DEVELOPER FOR CO NSTRUCTION OF MM PROJECT AND AGAINST WHICH THE DEVELOPER COMPANY HAD PAID THE AMOUNT OF RS. 11,45,10,338/- TO THE ASSESSEE DURING THE YE AR UNDER CONSIDERATION AND THIS RECEIPT IN THE HANDS OF ASSESSEE IS SURPLU S OF THEIR STOCK-IN-TRADE AND ACCORDINGLY THE SAME IS TAXABLE DURING THE YEAR . LEARNED FIRST APPELLATE AUTHORITY HAS PASSED THE IMPUGNED ORDER U NDER THE LAW. AFTER CONSIDERING THE VARIOUS PROVISIONS APPLICABLE IN TH E CASE OF THE ASSESSEE AND CASE LAWS CITED BY BOTH THE PARTIES, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORD ER PASSED BY LEARNED 44 I.T.A. NO. 436 (ASR)/2012 ASSESSMENT YEAR: 2009-10 FIRST APPELLATE AUTHORITY AND WE UPHOLD THE IMPUGNE D ORDER DATED 25.10.2012 AND DISMISS THE APPEAL FILED BY THE ASSE SSEE. 20) IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER, 2013 SD/./ SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH SEPTEMBER, 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S HERITAGE PROJECTS M- 1F, GREEN AV ENUE, AMRITSAR 2. THE ACIT, CIRCLE V, AMRITSAR 3. THE CIT(A), AMRITSAR 4. THE CIT, AMRITSAR 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.