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

ITA 1685/DEL/2019

AI Insights

The case involves M/S Roots Developers Pvt Ltd appealing against the order of the Commissioner of Income Tax (Appeals)- 2 1, Gurgaon, which confirmed the addition of Rs. 3,96,00,000 to the assessee's income for the assessment year 2015-16. The addition was based on alleged receipts from M/s CHD Developers Ltd for the sale of flats. The Tribunal referenced earlier cases (ITA No. 3106/Del/2017 to 3107/Del/2017 and ITA No. 1683/Del/2019 to 1684/Del/2019) where similar additions were deleted, indicating a consistent judicial approach towards the taxability of such receipts. The Tribunal directed the Assessing Officer to verify the inclusion of a Rs. 25 crore security deposit in the total sale proceeds of Rs. 115 crore, as claimed by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396473 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Other Referred Cases: Root developers Private Limited vs. DCIT, Circle -3 Gurgaon
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: RAKESH GUPTA
• Section: 143(3); 142(1); 234B

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’, NEW DELHI BEFORE SH. SUDHIR KUMAR, JUDICIAL MEMBER AND SH. MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.1685/Del/2019 Assessment Year: 2015-16 M/S Roots Developers Pvt Ltd. C/O M/S RRA TAXINDIA D-28 South Extension Part -1 New Delhi -110049 PAN No.AADCR8954B Vs. The DCIT Circle -3 Gurgaon (APPELLANT) (RESPONDENT) Appellant by Sh. Rakesh Gupta, Advocate Sh. Shrey Jain, Advocate Respondent by Sh. OM Prakash Sr. DR Date of hearing: 21/05/2025 Date of Pronouncement: 28/05/2025 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER: This appeal is preferred by the assessee against the order dated 29.01.2019 of the Commissioner of Income Tax (Appeals)- 2 1, Gurgaon [hereinafter referred to as “CIT(A)”] arising out of the order of Assessing Officer dated 04.05.2017 passed under section 143(3) of the Income Tax Act, 1961 [herein after, the Act] for the assessment year 2015-16. 2. The assessee has raised following common ground of appeal: 1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 3,96,00,000/- being the alleged receipts accrued from M/s CHD Developers Ltd. for sale of flats. 2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs. 3,96,00,000/- being the alleged receipts accrued from M/s CHD Developers Ltd. for sale of flats is bad in law and against the facts and circumstances of the case. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts of the case in not reversing the action of Ld. AO in charging interest u/s 234A, 234B and 234C of the Act.” 3. The brief facts of the case are that the assessee e-filed the return of income declaring total income of Rs. 3,82,80,420/-on 30-09-2015. The case was selected for scrutiny through CASS. Notice under section 143(2) of the Act was issued on 12-04- 3 2016and duly served on the assessee. Again, notices u/s 142(1) along with questioner was issued on 13-04-2017. In the response the authorized representative of the assessee attended the proceedings. After considering the submission made by the assessee the A.O has made the addition of Rs.3,96,00,000/- being receipt from the M/s CHD developers Ltd. and completed the assessment. 4. Aggrieved the order of the A.O. the assessee company filed the appeal before the Ld. CIT(A) who vide his order dated 31-01- 2019 dismissed the appeal. The Ld. CIT(A) observed in his order as under: “5.3. I have carefully considered the submission of the appellant. Addition made by the A.O. is based on the appellate order passed in the case for A.Ys. 2010- 11 and 2011-12. Following the order of the CIT(A) in appellant’s case for A.Ys. 2010-11 and 2011-12 the addition made by A.O. in the year under consideration is confirmed. The grounds of appeal are dismissed.” 5. Being aggrieved the order of the Ld. CIT(A) the assessee is in appeal before the Tribunal. 4 6. Ld. Counsel for the assessee submitted that the case is squarely covered from the assessee own case ITA No. 3106/Del/2017 to 3107/Del/2017 and ITA No. 1683/ Del/ 2019 to 1684/Del/ 2019 for the A. Y. 2010-11 to 2014-15 in which the addition have been deleted. He also submitted that the appeal of the assessee be allowed. 7. Ld. Sr, DR fairly admitted this fact. 8. We have heard the parties and gone through the materials available on record. 9. In the ITA No.3106/Del/ 2017 Root developers Private Limited vs. DCIT, Circle -3 Gurgaon the Co-ordinate Bench held as under: 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, nonadjustable 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 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 5 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 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.” 10. The case of the assessee is squarely covered from the assessee’s own case and following the aforesaid decision, we 6 hold that addition made by the A.O. and confirmed by the Ld. CIT(A) is not taxable in the hand of the assessee. The addition of Rs 3,96,00,000/- is deleted. 11. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 28.05.2025. Sd/- Sd/- (MANISH AGARWAL) (SUDHIR KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Date: .05.2025 f{x~{tÜ? fÜA cf f{x~{tÜ? fÜA cf f{x~{tÜ? fÜA cf f{x~{tÜ? fÜA cf Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "