ROOTS DEVELOPERS PVT. LTD.,NEW DELHI V. DCIT CIRCLE-03, GURGAON

ITA 1684/DEL/2019

AI Insights

The case involves Root Developers Private Limited appealing against the orders of the Commissioner of Income Tax (Appeals) concerning the assessment years 2010-11, 2011-12, 2013-14, and 2014-15. The primary issue was the taxability of certain amounts received from M/s CHD Developers Ltd. under a collaboration agreement for a real estate development project. The Income Tax Department contended that these amounts should be treated as income in the hands of Root Developers, while the company argued that it was a developer and the income should be recognized on a POCM basis. The Tribunal's decision focused on the nature of the receipts and the timing of income recognition under the Income Tax Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 38885 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Other Referred Cases: G.S Homes & Hotels (P) Ltd. V/s CIT, Dy. CIT v. G.S. Homes & Hotels (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Keywords: Business income; Fair market value; Capital Gains; Capital asset converted into stock in trade
• Section: 201; 153; 132; 22; 45(2); 133(6); 13; 133A; 150(1); 20

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘FRIDAY-H’’ : NEW DELHI) BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO. 3106/Del/2017 (AY 2010-11) ITA NO. 3107/Del/2017 (AY 2011-12) ITA NO. 1683/Del/2019 (AY 2013-14) & ITA NO. 1684/Del/2019 (2014-15) Root Developers Private Limited, VS. DCIT, Circle-3, C/o RRA TaxIndia, Gurgaon D-28, South Extension, Part-I, New Delhi – 49 (PAN: AADCR8945B) (Applicant) (Respondent) Applicant by : Dr. Rakesh Gupta, Adv. & Sh. Somil Agarwal, Adv. Respondent by : Sh. Dayainder Singh Sidhu, CIT(DR) &* Shri Om Prakash, Sr. DR Date of Hearing 09.01.2025 Date of Pronouncement __.03.2025 ORDER Per Madhumita Roy, JM : These four appeals filed by the assessee are directed against different orders of the Ld. Commissioner of Income Tax (Appeals)-1, 2 Gurgaon for Assessment Years 2010-11, 2011-12, 2013-14 and 2014-15 respectively, arising out of the respective orders passed by the DCIT, Circle-3, Gurgaon under Section 147/143(3) of the Income Tax Act, 1961(hereinafter referred to as the \"Act\").Since the issues are interconnected, therefore, the appeals were heard together and are being disposed of by this common order for the sake of convenience. AY 2010-11 2. The brief facts leading to the matter are that a search action under Section 132 of the Income Tax Act, 1961 was conducted in the case of M/s CHD Developers Ltd on 23-11-2012 at SF 1617, BhikajiCamaBhawan, BhikajiCama Place, Delhi. During the course of search proceedings, a collaboration agreement dated 13.02.2010 was found and seized. A survey action under Section 133 A of Income Tax Act, 1961 was conducted on the office premise of M/s Root Developers Pvt. Ltd, on 19-03-2013 at F17, Central Plaza, Golf Course Road, Gurgaon. During the course of survey action under Section 133A of the Income Tax Act, 1961 on the premises of M/s Root Developers Pvt. Ltd., another collaboration agreement dated 17.7.2006 was found and seized. Relevant to mention that M/s Roots Developers Pvt. Itd. was carrying on the activity of real estate development projects in the capacities of both as developer and collaborator. The company was 3 incorporated on 04-03-2008. The directors of company are Sh.SurenderYadav, Sh. NarenderYadav, Sh. Jitender Yadav and Sh. DevenderYadav.The company was also developing a project in the name of \"Courtyard Project\" at Sector-48, Gurgaon.The owners of land, measuring 1646 acres situated at village-Fazilpur-Jharsa, Sector 70, Gurgaon pertaining to the agreements are Dharampal Singh HUF through Karta Sh. Dharampal Singh, Sh. Surender Yadav, Sh. Virender Singh and Late Sh.Phool Singh Yadav through wife Smt. Roshni Devi (Legal Heir), collectively referred to as \"Owners\" hereinafter, claimed to have entered into an agreement with M/s Root Developers Co. on 17-07-2006 to develop the said land.Subsequently the owners of the said land i.e. Sh. Dharampal Singh (HUF) and other owners of the land applied for license to develop a residential group housing project on the said land. It was submitted by them before the Government of Haryana that they were in possession of the land. The land owners filedapplication before the directorate of town and country planning Haryana for change of land use. The DTCP, Haryana vide its letter No. Memo No.DS-07/31808 dated 24.12.2007 granted the license to Sh. Dharampal Singh (HUF) and others for development of residential group housing project. Further Sh. Dharampal Singh (HUF) and other owners along with M/s Roots Developers Pvt. Ltd. entered into a collaboration agreement with M/s CHD Developers Ltd. dated 4 13.02.2010 for development of group housing project. As per the collaboration agreement, para No. 13, M/s CHD Developers Ltd. agreed to pay a sum of Rs.25 Crores to M/s Roots Developer Pvt. Ltd. as non- refundable and nonadjustable. In addition to the above M/s CHD Developers Ltd., vide para No.2 at page No.5 of the agreement, agreed that the share of owners and M/s Root Developers Pvt. Ltd. would be 34.5% of the saleable area. M/s CHD Developers Pvt. Ltd., got land from Sh. Dharam Pal Singh Yadav (HUF) and others and sold their allotted unit on behalf of them. The amount collected on sale was paid to the appellant, through M/s Roots Developer Pvt. Ltd.The AO pointed out that the assessee had received a total amount of Rs.5,50,00,000/- through Karta Sh.Dharampal Singh from the above mentioned project. The AO further pointed out that this amount had not been offered for taxation in the year under consideration. The AO accordingly asked the assessee to explain why this amount may not be added it its hand. 3. The assessee contended that the land under consideration had been transferred at the time of signing of collaboration agreement dated 17/07/2006 i.e. in the AY 2007-08 and as such no amount was taxable in the year under consideration. The AO considered the appellant's submissions but was not satisfied. The AO thereafter referred the matter to the Addl. CIT under section 144A of the Act. The Addl. CIT gave an opportunity to the assessee. The assessee submitted 5 that the land under reference was basically 8 Km. away from the municipality limit of Gurgaon when it was given in collaboration to M/s Roots Developer Company in 2006. The assessee also submitted the details of area of land and year wise receipts by the land owners from M/s Roots Developer Pvt. Ltd. The Addl. CIT after considering the assessee’s submissions referred to the survey proceedings and post survey enquiry and pointed out that the assessee had failed to submit any evidence regarding the existence of M/s Roots Developers Company. The Addl. CIT pointed out that the assessee was asked to produce original partnership deed, balance sheet, books of accounts and other supportingevidence. However, the assessee failed to produce either the original or photocopy of the partnership deed. The Addl. CIT further pointed out that as per the balance sheet as on 31/03/2007 there was no partner's capital, no cash in hand and no bank account of the firm. Further, as per the agreement. dated 17/07/2006 M/s Roots Developers Company had made advance of Rs. 6 lakhs to land owner whereas there was no cash in hand in the balance sheet of the firm during the said period. With regard to the books of accounts, the Addl. CIT pointed out that total one page, containing ledger account of partners and other heads of balance sheet was produced.No cash book was produced to support the cash payments of advance.Regarding the collaboration agreement dated 6 17/07/2006, the Addl. CIT pointed out that the assessee had not been able to produce original copy of the collaboration agreement dated 17/07/2006. The Addl. CIT further pointed out that the agreement dated 17/07/2006 found and impounded during survey of M/s Root Developers Pvt. Ltd. was different from copy of the same agreement as submitted by the developers i.e. M/s CHD Developers Ltd. The Addl. CIT pointed out that the copy of agreement submitted by M/s CHD Developers Ltd. does not show the amount of consideration to be paid to land owners whereas the same is shown as 75 crores in the agreement provided by M/s Root Developers Pvt. Ltd. The relevant paras of the two agreements are reproduced on page-18 of the assessment order and are not being reproduced here for the sake of brevity. The Addl. CIT observed that in view of the aforesaid facts, the existence of partnership firm, M/s Root Developers Company, and the agreement dated 17/07/2006 was not proved. The Addl. CIT held that the only material to determine the nature of transaction, which could be taken into consideration, was the collaboration agreement dated 13/02/2010. 4. The Addl. CIT held that the land was in possession of the land owners and the land owners had got the land converted for the development for group housing residential colony. The AddI.CIT was of the view that at this stage the land holding was converted into stock in 7 trade.Regarding the transaction pertaining to agreement dated 13/02/2010, the Addl.CIT referred to the various clauses of the agreement and pointed out that the land owners were absolute owners of the said land as per the land records and had good marketable title in respect of the same. 5. The Addl. CIT accordingly directed that the income in the case of the assessee was to be taxed as capital gains till the conversion of asset into stock in trade and after that the income was to be taxed as income from business applying the provisions of section 45(2) of the IT Act. The AO accordingly completed the assessment proceedings by holding that the income arising on account of conversion of land into stock in trade on 13/02/2010 i.e. the date of signing of collaboration agreement with M/s CHD Developers as income under the head capital gains and the remaining income received on account of collaboration agreement with M/s CHD Developers Pvt. Ltd. as business income.For computing the capital gains on account of conversion into stock in trade on 13/02/2010, the AO issued notice u/s 133(6) to the Sub-Registrar, Gurgaon. From the information received from Tehsildar, the AO adopted the rate of Rs. 85 lakhs per acre as the fair market value in the FY 2010-11 and accordingly computed the capital gains and the business income. 8 6. Aggrieved by the aforesaid order passed by the AO the assessee preferred appeal before the Ld. CIT(A) who in turn partly allowed the appeal of the assessee by holding that M/s Roots Developers Pvt. Ltd, is an independent company doing its own independent development work in addition to the income from collaboration agreement referred to above. He further noted that the income arising from these independent business activities is in addition to the amount of Rs. 115.88 crores received by the land owners and M/s Roots Developers Pvt. Ltd. subject to the above the total income assessable on account of the collaboration agreement in the hands of the land owners and M/s Roots Developers Pvt. Ltd. up till AY 2015-16 should not be more than Rs. 115.88 crores. He further noted that the taxability of the consideration received by the land owners and by M/s Root Developers Pvt. Ltd. was a consequence of the collaboration agreement dated 13/02/2010 with M/s CHD Developers Pvt. Ltd. As per this agreement, M/s Root Developers Pvt. Ltd. received an amount of Rs. 25 crores as non refundable, non adjustable amount. Further, M/s Root Developers Pvt. Ltd. alongwith the owners were entitled to 34.5% of the saleable area developed by M/s CHD Developers Pvt. Ltd. Before him, the assessee has contended that the land owners were entitled to get an amount of Rs. 75 crores only from aforesaid collaboration agreement and the arrangements with M/s Roots Developers Pvt. Ltd. and the 9 balance amount was to be kept by M/s Root Developers Pv. Ltd. as its profits. The amount of Rs. 75 crores was to be received by the land owners through M/s Roots Developers Pvt. Ltd. It was noted by him that land owners have been paid an amount of Rs. 63,01,71,700/- upto AY 2016-17. Ld. CIT(A) further observed that the land owners have been paid only part of the consideration. Further, it is observed that the payments made to the land owners are not in proportion to their share. Be that as it may, it is evident that as per the agreement dated 13/2/2010 between M/s CHD Developers, the land owners and M/s Roots Developers Pvt. Ltd, were entitled to get 34.5 % share in the saleable area.However, the shares of M/s Roots Developers Pvt. Ltd. and the land owners were not separately provided for in the agreement. In these circumstances, the shares of the land owners and M/s Roots Developers Pvt. Ltd. can be determined only from the other documents on record and the evidences on record. In this regard, following facts may be reiterated:- i. As per the contentions of the land owners, they were entitled to a total amount of Rs. 75 crores proportionate to their share of land, in lieu of the value of land. ii. As per the contentions of the land owners, the amount of Rs. 75 crores was to be paid to them by M/s Roots Developers Pvt. Ltd. 10 iii. As per the Written Submissions filed by the Appellant, total amount of Rs. 63,01,71,700/- has been paid by M/s Roots Developers Pvt. Ltd. to the land owners out of their share of Rs. 75 crores. iv. As per Written Submissions filed by the Appellant, M/s Roots Developers Pvt. Ltd. was liable to pay Rs. 75 crores to the land owners towards the cost of land and the balance amount received by M/s Roots Developers Pvt Ltd. was its income from business which M/s Roots Developers Pvt. Ltd. had claimed to have shown as business income in the return filed by it, on POCM basis. v. Land owners have not claimed any right in the proceeds of sale of 34.5% of the saleable area under the Agreement dated 13.02.2010 other than the amount of Rs. 75 crores referred to above. vi. Land owners had not shown any business income or any income under any other head on account of any share in the sale proceeds of 34.5% of the saleable area in any of the years in which they had received various amounts from M/s Roots Developers Pvt. Ltd. vii. vii. M/s Roots Developers Pvt. Ltd. has claimed that the amounts received from M/s CHD Developers as per the term of 11 the Agreement dated 13.02.2010had been shown as business income on POCM basis. 7. In view of above facts, Ld. CIT(A) observed that although there is no written agreement available on record between M/s Roots Developers Pvt. Ltd. and the land owners regarding the transfer of rights in land, there was an internal arrangement between the landowners and M/s Roots Developers Pvt. Ltd., written or unwritten, that M/s Roots Developers Pvt. Ltd. was to pay the land owners an amount of Rs. 75 crores in lieu of transfer of their rights in land which rights were subsequently transferred by M/s Roots Developers Pvt. Ltd. through the tripartite agreement dated 13.2.2010 to M/s CHD Developers. The existence of an agreement, written or unwritten, between the land owners and M/s Roots Developers Ltd. is also evident from the fact that M/s Roots Developers Pvt. Ltd. was a party to the tripartite agreement dated 13.02.2010 although no part of the land was owned by it. It is accordingly held that the total consideration received/receivable by the four land owner under the collaboration agreement dated 13/02/2010 during the FY 2009-10 relevant to AY 2010-11 was Rs. 75 crores on pro-rata basis and accordingly the taxable capital gains arising in the hands of the four land owners viz. Dharmapal (HUF), SurenderYadav, Smt. Roshni Devi, W/o Lt. Sh. Phool Singh Yadav and Virender Singh. He further held that capital gains are taxable in the 12 hands of the land owners in the year of transfer i.e. the year in which the collaboration agreement dated 13.02.2010 was signed (F.Y. 2009- 10) i.e. AY 2010-11. It was further noted that the balance amounts, over and above the amount of Rs. 75 crores referred to above, received by M/s Roots Developers Pvt. Ltd., the assesseehas contended that these amounts were to be considered as business income in the hands of M/s Root Developers Pvt. Ltd. on POCM basis. I do not agree with this contention of the assesseethat the income is taxable on POCM basis. 8. Ld. CIT(A) further observed that the clause No. 13 of the Collaboration Agreement mentions that Rs. 25 crores is to be paid as non refundable non adjustable amount. There was no mention of the word 'security' or 'deposits'. As this amount was paid by M/s CHD Developers in lieu of M/s Roots Developers Pvt, Ltd. permitting M/s CHD Developers to develop residential housing complex, and as far as development of residential housing complex is concerned. it was a business venture for M/s Roots Developers Pvt Ltd, the payments received by Me Roots Developers Pvt Ltd are revenue in nature and such a receipt is taxable in the year of receipt. M/s Root Developers Pvt Ltd, had received Rs. 13 crores and Rs. 12 crores in the AY 2010-11 and 2011-12 respectively on this account. These amounts are accordingly held to be taxable in the respective year in the hand of M/s Root 13 Developers Pvt. Ltd, in view of the decision of the Hon'ble Supreme Court in the case of G.S Homes & Hotels (P) Ltd. V/s CIT 141DTR 201 (SC) wherein the Hon'ble Supreme Court confirmed the order of the Hon'ble Karnataka High Court in Dy. CIT v. G.S. Homes & Hotels (P.) Lid. [IT Appeal No. 16/2003 and ITA CR No. 1/2009, dated 16-9-201 1] holding that maintenance deposit received by the assessee is taxable. 9. Accordingly, Ld. CIT(A) directed the AO to recompute the incomes in the hands of the land owners and M/s Roots Developers Pvt. Ltd. for the aforesaid AYs. In this regard, as the incomes assessed by the AO in the case of land owners in AY 2011-12, AY 2012-13 and AY 2013- 14 have been held to be assessable in the AY 2010-11, as provided in section 150(1) read with Explanation 2 to section 153 of the IT Act, and directed the AO to take action under the relevant provisions of the IT Act for the AY 2010-11 in the case of the land owners and for AYs 2013- 14, 2014-15, 2015-16 and 2016-17 in the case of M/s Roots Developers Pvt. Ltd. to give effect to this order. Aggrieved with the aforesaid action of the Ld. CIT(A), assessee is in appeal before us. 10. At the time of hearing, Ld. AR for the assessee submitted that issue involved in the present appeal is about the taxability of Rs. 13,00,00,000/- in AY 2010-11 and Rs. 12,00,00,000/- in AY 2011-12 being the non-refundable, non-adjustable amounts received by the 14 appellant from M/s CHD Developers Ltd. He further submitted that according to the Ld. AO/Ld. CIT(A), these amounts were received by the Assessee as facilitation/agency fees from M/s CHD Developers Lid. whereas the case of the assessee is that total amount received from M/s CHD Developers Ltd. aggregating to Rs. 115Cr (including the said Rs. 13Cr and Rs. 12 Cr.) was offered by the assessee to tax on Percentage Of Completion Method (POCM) basis in AY 2012-13, 2013-14, 2014-15 since the assessee is a developer and therefore, there should not be any separate taxability of Rs. 13,00,00,000/- and Rs. 12,00,00,000/- and in any case, that would tantamount to doubleaddition. He further submitted that AO/Ld. CIT(A) both negatived the claim of the assessee of being a developer on the ground that development has been done by M/s CHD Developers Ltd. and Assessee has merely facilitated the collaboration agreement.He further submitted that since, project development was started by assessee, hence, assessee was a developer only and merely because appellant could not complete the development on its own and took M/s CHD Developers Ltd. as the co-developer, it does not mean that assessee ceases to be a developer.Moreover, it has already been accepted by Ld. CIT(A) in his appeal order that Rs. 115Cr. was received by Assessee from M/s CHD Developers Ltd. out of which Appellant paid Rs. 63Cr. (out of total 75Cr. To be paid in aggregate) to the land-owners. 15 Therefore, the Assessee was developer only and has rightly recognized income on POCM basis. It was the further contention that the Assessment order and CIT(A)’s order contained the consistent pleading of the Assessee to this effect that assessee being developer, business income from this project has been offered on POCM basis on the lines as offered by co-developer namely M/s CHD. He further submitted that without prejudice to the above, if the said amount of Rs. 13,00,00,000/- is to be taxed in AY 2010-11 and Rs. 12,00,00,000/- in AY 2011-12, there are following two prayers of the Appellant: (i) That aggregate expenses of the project of Rs. 15.88Cr and payment to land owners of Rs. 75Cr. Paid by the appellant may be allowed.(ii) Income already offered by the assesse in AY 2012-13, 2013-14 and 2014-15 by including the said sum of Rs. 13 crores and Rs. 12 crores may suitably be adjusted so that double taxation may be eliminated. 11. On the other hand the ld. DR relied upon the orders of the authorities below. The submitted that as per the contentions of the land owners, they were entitled to a total amount of Rs. 75 crores proportionate to their share of land, in lieu of the value of land and the amount of Rs. 75 crores was to be paid to them by M/s Roots Developers Pvt. Ltd. It was submitted that as per the version of the Ld.AR the total amount of Rs. 63,01,71,700/- has been paid by M/s Roots Developers Pvt. Ltd. to the land owners out of their share of Rs. 16 75 crores and M/s Roots Developers Pvt. Ltd. was liable to pay Rs. 75 crores to the land owners towards the cost of land and the balance amount received by M/s Roots Developers Pvt Ltd. was its income from business which M/s Roots Developers Pvt. Ltd. had claimed to have shown as business income in the return filed by it, on POCM basis. It was further submitted that land owners have not claimed any right in the proceeds of sale of 34.5% of the saleable area under the Agreement dated 13.02.2010 other than the amount of Rs. 75 crores and had not shown any business income or any income under any other head on account of any share in the sale proceeds of 34.5% of the saleable area in any of the years in which they had received various amounts from M/s Roots Developers Pvt. Ltd. It was further submitted that theassesseehas claimed that the amounts received from M/s CHD Developers as per the term of the Agreement dated 13.02.2010 had been shown as business income on POCM basis. It was further submitted that although there is no written agreement available on record between M/s Roots Developers Pvt. Ltd. and the land owners regarding the transfer of rights in land, there was an internal arrangement between the landowners and M/s Roots Developers Pvt. Ltd., written or unwritten, that M/s Roots Developers Pvt. Ltd. was to pay the land owners an amount of Rs. 75 crores in lieu of transfer of their rights in land which rights were subsequently transferred by M/s 17 Roots Developers Pvt. Ltd. through the tripartite agreement dated 13.2.2010 to M/s CHD Developers. The existence of an agreement, written or unwritten, between the land owners and M/s Roots Developers Ltd. is also evident from the fact that M/s Roots Developers Pvt. Ltd. was a party to the tripartite agreement dated 13.02.2010 although no part of the land was owned by it. Hence, the lower authorities held that the total consideration received/receivable by the four land owners under the collaboration agreement dated 13/02/2010 during the FY 2009-10 relevant to AY 2010-11 was Rs. 75 crores on pro- rata basis and accordingly the taxable capital gains arising in the hands of the four land owners viz. Dharmapal (HUF), Surender Yadav, Smt. Roshni Devi, W/o Lt. Sh. Phool Singh Yadav and Virender Singh was rightly held in the hands of the land owners in the year of transfer i.e. the year in which the collaboration agreement dated 13.02.2010 was signed (F.Y. 2009-10) i.e. AY 2010-11. It was further submitted that the lower authorities below that the balance amounts, over and above the amount of Rs. 75 crores referred to above, received by M/s Roots Developers Pvt. Ltd., the assessee has contended that these amounts were to be considered as business income in the hands of M/s Root Developers Pvt. Ltd. on POCM basis, which was not agreeable. He further submitted that although, the profits over and above, the amount of Rs. 75 crores, received by M/s Roots Developers Pvt. Ltd. are 18 taxable as business profits in the hands of M/s Roots Developers Pvt. Ltd., there is no justification for the assessee’s claim that these profits are taxable on the basis of POCM. It was the further contended that in view of the collaboration agreement that M/s Roots Developers Pvt. Ltd had no role in the development of the project. As per the provisions of the agreement, the development of the project was to be carried out by M/s CHD Developers Pvt. Ltd. from their own sources. Further, there is no evidence on record that any expenditure had been incurred by M/s Roots Developers Pvt. Ltd. with regard to the development of the project prior to the date of signing of the collaboration agreement dated 13/02/2010.There is no mention of any such work having been done by M/s Roots Developers Pvt. Ltd. Hence, it is evident that prior to the signing of collaboration agreement, even the plan for the complex were not prepared and as such there was no scope for any expenditure to be incurred by M/sRoots Developers Pvt. Ltd. Under these facts and circumstances of the matter, the contention of the assesseethat the profits arising in the hands of M/s Roots Developers Pvt. Ltd. are to be taxed on POCM basis is not legally sustainable. It was further submitted by the Ld. DR that in addition to the amounts received on account of sale of saleable area, M/s Roots Developers Pvt. Ltd. had also received Rs. 25 crores as non refundable, non adjustable amount. The assessee has contended that the amount of Rs. 25 crores 19 received by M/s Root Developers Pvt. Ltd. is security deposit and does not become income of the assessee and that the profits of the company have been shown on POCM basis. Hence, Ld. CIT(A) rightly not agreed with this contention of the assessee and observed that M/s Root Developers Pvt. Ltd. was an independent company carrying on its independent business activity in the form of development of a project in the name of courtyard project at Sector-48, Gurgaon. In the collaboration agreement dated 13/02/2010 M/s Root Developers Pvt. Ltd. was a party and for its contribution in the collaboration agreement, M/s Root Developers Pvt. Ltd, had received an amount of Rs. 25 crores which has been correctly taxed as income in the hands of the M/s Root Developers Pvt. Ltd. for the two AYs. Hence, he requested to uphold the orders of the authorities below. 12. We have heard the rival contentions made by the respective parties and perused the records. We find that the issue involved in the present appeal is about the taxability of Rs. 13,00,00,000/- in AY 2010- 11 and Rs. 12,00,00,000/- in AY 2011-12 being the non-refundable, non- adjustable amounts received by the assessee from M/s CHD Developers Ltd.The total sale proceeds of Rs. 115 cr and according to the deed of agreement, the land ownersare to be paid 34.55% i.e. Rs. 75 cr. Assessee recognized revenue of Rs. 115 cr – Rs. 75 cr = Rs. 40 cr as income for AY 2012-13, 2013-14 and 2014-15 as per the POCM. The 20 CIT(A) assessed that the assessee is not a developer rather the CHD Developer is the developer. In terms of the agreement, Rs. 25 cr. is the security deposit to be kept with the assessee. According to the assessee Rs. 25 crore is included in the entire sale proceeds of Rs. 115 cr. This Rs. 25 cr. Is independent of Rs. 115 cr and cannot be construed as security deposit per se and therefore, to be added in the hands of the assessee as unexplained cash as was the case made out by the revenue. 13. On the other hand, it appears from the records that the assessee spent development charges expenditure appearing at page no. 18 of the paper book 1. Though permission was obtained by the land owner, it was agreed upon between the land owners and the assessee before us that the project is to be developed or get it developed by Root Developers which is why bank guarantee was also given for payment of external development charges which proves that assesse is not other than a developer. In fact page No. 50of the paper book being the balance sheet as on the date on 31.3.2010 is clearly depicted that the assessee incurred cost of Rs. 158892504.18 as the cost of the project. Initially the agreement was made between the assessee and the land owners, but subsequently construction was admittedly done by the CHD Developers. Page 92 of the Paper Book-1 evidencing that Rs. 25 cr is included in Rs. 115 cr. as the total sale proceeds. The assessee’s claim that the same has already disclosed. Under these facts and 21 circumstances of the case, we are directing the AO to verify this particular aspect of the matter as to whether Rs. 25 crore received by the assessee as security deposit is included in Rs. 115 cr. If it is found, then assessee be given relief accordingly. Otherwise, orders be passed in accordance with law. Accordingly, these two appeals preferred by the assessee are allowed for statistical purposes. AY 2013-14& 2014-15. 14. Assessee has also incurred IDC and EDC in AY 2008-09 and the balance sheet at page No. 50 of the Paper Book as on 31.3.2010 shows that the assessee has already incurred expenditure of Rs. 15 cr for the project in question. Moreso, payment of EDS and IDC made in the year 2008-09. In this regard, AR referred the page Nos. . 266 -267 of the PB-I filed before us. Furthermore, once the assesse has disclosed revenue under POCM to the tune of Rs. 26.46 cr. For AY 2013-14, and therefore, the addition to the tune of Rs. 2,55,73,814/- is found to be not assessable in the hands of the assessee and thus deleted. Following the consistent view, in assessment year 2013-14, the addition made in 2014-15 also stand deleted. 22 15. In the result, all the four appeals of the assessee are allowed in the aforesaid manner. Order Pronounced on 26/03/2025. Sd/- Sd/- (M. BALAGANESH) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Copy forwarded to: - 1. Appellant 2. Respondent 3. DIT 4. CIT (A) 5. DR, ITAT Assistant Registrar "